CoinEX, a cryptocurrency trading platform, has announced its decision to cease operations in New York following a settlement agreement with the Office of the New York Attorney General (NYAG). The Hong Kong-based exchange has agreed to pay a settlement amount of $1.7 million and refund investors who were affected by their actions.
The allegations against CoinEX include failure to register as a securities and commodities broker-dealer and misrepresentation as a legitimate crypto exchange. The NYAG filed a lawsuit against the platform in February, prompting the subsequent settlement.
As part of the settlement, CoinEX will allocate $1.1 million for the refund of thousands of affected investors, while an additional $600,000 will be paid as a penalty to the state of New York. The refund payments are expected to be completed within three months for amounts held as of April 25. Attorney General Letitia James highlighted that this settlement serves as a warning to other cryptocurrency companies.
Attorney General James emphasized the risks posed by unregistered crypto platforms to investors, consumers, and the broader economy. She stated that the consequences for disregarding New York’s laws are significant and urged crypto companies to take heed.
The allegations against CoinEX revolve around violations of The Martin Act, a stringent anti-fraud regulation established in 1921. The act prohibits the sale or purchase of securities and commodities without proper registration.
In addition to the settlement and refund requirements, CoinEX is prohibited from creating new accounts for customers in the United States. However, existing US customers will be able to withdraw their cryptocurrency from the platform. To prevent access from new New York IP addresses, the exchange is also mandated to implement geo-blocking on its web and app trading platforms.
The actions taken against CoinEX highlight the importance of compliance with regulations in the cryptocurrency industry. The settlement serves as a reminder that authorities are actively monitoring and enforcing laws to protect investors and maintain the integrity of the financial system.
The Proposed Bill Intentions
CoinEX is not the exclusive exchange facing enforcement actions initiated by state prosecutors in New York. In May, Attorney General James successfully secured $4.3 million from Coin Cafe, a cryptocurrency company located in Brooklyn. Similarly, in March, charges were filed against KuCoin by the same regulatory authority.
In a statement, the New York Attorney General’s Office announced that it has retrieved a cumulative amount of $500 million from the cryptocurrency industry as part of its ongoing efforts to strengthen oversight and implement regulations within the sector. The Attorney General has also expressed intentions to propose a legislative bill to regulate digital assets to the state legislators.
