New York Attorney General Recovers $1.7 Million from CoinEx for Operating Illegally

New York Attorney General Letitia James has successfully recovered over $1.7 million from CoinEx (COINEX) following a lawsuit against the cryptocurrency platform. CoinEx was found to be operating without the necessary registration as a securities and commodities broker-dealer and falsely representing itself as a crypto exchange. The resolution of the lawsuit requires CoinEx to refund more than $1.1 million to New York investors and pay over $600,000 in penalties to the state.

As part of the consent order, CoinEx is now banned from offering securities and commodities transactions in New York and prohibited from providing its platform in the state. In response to the lawsuit, CoinEx has publicly announced its withdrawal from the United States. Attorney General James has been actively working to enhance oversight and regulation of cryptocurrency companies to safeguard New York investors, resulting in over $500 million recovered from the cryptocurrency industry.

Attorney General James stressed the risks associated with unregistered crypto platforms, highlighting the importance of compliance with New York’s laws. She reiterated her commitment to crack down on crypto companies that disregard the law, deceive investors, and put New Yorkers at risk.

CoinEx, a Hong Kong-based virtual currency trading platform, allowed investors to buy and sell cryptocurrency without registering as a securities and commodities broker-dealer, a requirement under New York law. An investigation conducted by the Office of the Attorney General (OAG) confirmed that individuals with New York-based IP addresses could easily access and utilize CoinEx’s services.

Under the terms of the settlement, CoinEx is obliged to provide full refunds totaling $1,172,971.50 to 4,691 investors in New York. The refunds can be received as cryptocurrency directly from CoinEx within the next 90 days. After this period, eligible investors can request their refund in U.S. currency by contacting OAG. The refund amount will be based on the cryptocurrency or its cash equivalent held in the investors’ accounts as of April 25, 2023.

CoinEx must also implement geoblocking measures to prevent New York IP addresses from accessing its platform. In addition, the company is prohibited from creating new accounts for U.S. customers, and existing U.S. customers are only allowed to withdraw their cryptocurrency holdings from the platform.

This settlement is part of Attorney General James’ ongoing efforts to enforce New York laws within the cryptocurrency industry. Recent actions include the introduction of comprehensive cryptocurrency legislation, the recovery of $4.3 million from Coin Cafe for defrauding investors, and lawsuits against KuCoin, Nexo, and the former CEO of Celsius. The Attorney General has consistently emphasized the importance of accurately declaring and paying taxes on virtual investments and urges affected individuals to report deceptive conduct in virtual asset markets.

Assistant Attorney General Shantelee Christie, along with Legal Assistants Charmaine Blake and Edward Jaffe, and Senior Detective Investigator Brian Metz, handled the matter within the Investor Protection Bureau. The Bureau operates under the Division of Economic Justice, overseen by Chief Deputy Attorney General Chris D’Angelo and First Deputy Attorney General Jennifer Levy, with Bureau Chief Shamiso Maswoswe and Deputy Bureau Chief Kenneth Haim leading the Investor Protection Bureau.