CoinEx faces New York ban, ordered to pay $1.7m in penalties

Following a lawsuit, CoinEx, a cryptocurrency platform, has been prohibited from conducting operations in both New York and the US.

The firm was then ordered to pay $1.7 million in penalties and refunds to affected individuals in New York.

An agreement reached

CoinEx, the cryptocurrency platform, has reached an agreement to settle a lawsuit that was filed against it in February by the state of New York.

🚨There are serious consequences for ignoring New York laws.
As a result of our lawsuit, cryptocurrency platform @coinexcom is banned from operating in New York and the rest of the country and will pay $1.7 million in penalties and refunds for impacted New Yorkers. https://t.co/U3wkdfHu3o
— NY AG James (@NewYorkStateAG) June 15, 2023

In February, New York Attorney General Letitia James had filed a lawsuit against cryptocurrency exchange CoinEx, accusing the company of falsely representing itself as an exchange and failing to register as a securities and commodities broker-dealer in the state.

I’m suing cryptocurrency platform @coinexcom for illegally operating in New York without registering with the state.
⏰Wake-up call: crypto platforms must play by the same set of rules as everyone else.
— NY AG James (@NewYorkStateAG) February 22, 2023

The lawsuit, filed in the New York Supreme Court, alleges that CoinEx engaged in fraudulent practices and violated the strict Martin Act, which governs anti-fraud and securities regulations in the United States.

The Attorney General also highlighted that CoinEx listed tokens such as amp (AMP), LBRY credits (LBC), rally (RLY), and terra (LUNA), which she considers both commodities and securities.

Today’s announcement, stated that CoinEx has been banned from engaging in the offering, selling, or purchasing of securities and commodities in New York, and its platform will no longer be accessible in the state.

According to the agreement, a total of $1.1 million will be refunded to 4,691 investors from New York, while over $600,000 will be paid as penalties to the state.

In addition, CoinEx is required to implement geo-blocking measures to restrict access from New York IP addresses, and the creation of new accounts for U.S. customers is strictly prohibited.

During the next 90 days, CoinEx users will have the opportunity to retrieve their crypto funds directly from the exchange. After this period, eligible investors can request fiat currency refunds by contacting [email protected]

The refund process will cover cryptocurrency or cash equivalents held in accounts as of April 25, 2023, as outlined in the official announcement.

More stringent regulations

This comes just over a month after James announced the need for more stringent regulations on the cryptocurrency sector through the CRPTO Act.

The new legislation was intended imposing more stringent regulations on the cryptocurrency sector to protect consumers, investors, and the overall economy and would require crypto companies to undergo independent auditing, disclose financial statements, and establish mechanisms to compensate clients in case of fraudulent activities.

Amid the most recent regulatory crackdown, the introduction of a nation-leading regulation might be what the industry needs to continue blockchain development amid fears of being shut down by the SEC.

Source: https://crypto.news/coinex-faces-new-york-ban-ordered-to-pay-1-7m-in-penalties/