The NYAG stated that CoinEx was shut down for “falsely representing itself as a crypto exchange” and for failing to register as a broker-dealer.
Attorney General Letitia James has imposed a ban on the operation of the Hong Kong-based cryptocurrency exchange CoinEx in New York. According to a statement on June 15, the exchange’s cash worth more than $1.7 million were seized for allegedly not registering as a securities and commodities brokerage.
The agreement resolves a prior legal dispute between CoinEx and the state of New York from February when the latter accused CoinEx of misrepresenting itself as an exchange and bypassing to register with local authorities.
According to the notice, CoinEx is banned from offering selling, or buying securities and commodities in New York, as well as from making its platform accessible there.
According to the agreement, 4,691 New York investors will receive more than $1.1 million back, and the state will receive more than $600,000 in penalties.
🚨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
Additionally, CoinEx must put geo-blocking into place to block access from New York IP addresses. Additionally, CoinEx has been banned from creating any new accounts for clients in the United States.
“Today’s deal should serve as a reminder to cryptocurrency companies that breaking New York’s laws can have serious consequences.” Crypto firms that blatantly violate the law, defraud investors, and endanger New Yorkers will continue to come under pressure from my office, James said in the statement.
Over the following 90 days, CoinEx users will be able to get their cryptocurrency funds returned directly from the exchange. After this period, investors who are eligible can email coinexrefund@ag.ny.gov to request money in fiat currency. Investors will receive a refund for whatever cryptocurrency or cash equivalents they had in their accounts as of April 25, 2023, according to the release.
On February 22, James filed a lawsuit against CoinEx in the New York Supreme Court, alleging that the company had engaged “in repeated and persistent fraudulent practices” and had broken the Martin Act, one of the strongest anti-fraud laws in the country. In the complaint, James categorized a number of tokens as “both commodities and securities,” including Terra LUNA, LBRY Credits (LBC), Rally (RLY), and Amp.