CoinEx Reaches Settlement with NYAG And Is Barred From Operating In New York

In a landmark resolution marking the intensifying regulatory scrutiny on the crypto landscape, CoinEx, a prominent cryptocurrency exchange from Hong Kong, has settled a lawsuit with the New York Attorney General’s (NYAG) office. Originating from accusations of unlawful operations in February 2023, the settlement encompasses a payout surpassing $1.7 million and an imposed embargo on the exchange’s activities within New York.

Penalties, Refunds, and New York Investors

Reclaimed from the illicitly acquired pool of funds, most of this payment is earmarked for penalties, while the remainder will be returned to New York-based investors. The press release issued by the NYAG’s office outlines that CoinEx has consented to reimburse more than $1.1 million to over 4,600 New York investors. A penalty sum of $600,000 will further be compensated to the New York state. The prescribed 90-day timeline sees users repaid in crypto directly from the exchange.

In addition to the monetary provisions, the settlement involves several operational restrictions. The agreement prohibits CoinEx from buying, selling, or offering securities and commodities within New York. Further, it bans the firm from creating new accounts for U.S. customers. Moreover, CoinEx must implement geoblocking technology to obstruct access to its platform from New York IP addresses.

A Stern Warning for Crypto Companies

NYAG Letitia James, addressing the settlement, issued a stern warning to crypto companies:

“Today’s agreement serves as a harbinger for crypto entities. Neglecting New York’s stringent laws comes with severe penalties. My office will persistently clamp down on crypto firms that audaciously violate the law, deceive investors, and jeopardize New Yorkers.”

This resolution follows the NYAG’s recent order for Coin Cafe to remit over $4 million to users in response to allegations of defrauding investors with its deceptive “free” bitcoin wallet storage service.

The CoinEx settlement culminates the lawsuit instigated by the NYAG in February 2023. CoinEx, as per allegations, was implicated in misrepresenting itself as a cryptocurrency exchange and partaking in the sale of tokens classified as securities and commodities without proper authorization.

Shortly succeeding this lawsuit, CoinEx publicized its decision to withdraw its services from the U.S. market.

The Call for Stringent Crypto Regulations

In May, this regulatory overhaul was preceded by Attorney General James’ proposition of novel legislation, the Crypto Regulation, Protection, Transparency, and Oversight (CRPTO) Act.

The act advocates for more rigorous regulatory policies within the cryptocurrency domain. James attributes the high susceptibility to fraudulent and criminal activities within the crypto industry to the absence of robust regulatory rules.

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