CoinEx exchange settles for $1.7M with NYAG, exits US

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Hong Kong-based digital asset exchange CoinEx will pay $1.7 million in a settlement with the New York Attorney General (NYAG) over charges that it violated the state’s securities laws.

NYAG Letitia James first sued CoinEx in February for offering commodities and securities in the state without registering. She also alleged that the exchange lied to its users about its registration status.

In her lawsuit, she cited four tokens in particular—AMP, LBC, RLY, and LUNA—which the state considers securities. The U.S. Securities and Exchange Commission (SEC) has filed lawsuits against AMP and LBC for securities violations, while LUNA collapsed last May.

James has now won the legal battle, and CoinEx has agreed to a $1.7 million settlement.

🚨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

The settlement will see the exchange refund $1.17 million to over 4,600 New York investors. CoinEx will refund the digital assets directly within the next 90 days or as fiat thereafter. It will also fork out $600,000 in penalties to the state.

The exchange will also implement geo-blocking to prevent any New York investors from accessing its services. As James revealed previously, one staff member was able to open an account and trade with CoinEx, sparking the lawsuit in February.

CoinEx is prohibited from opening any new accounts for U.S. investors, and existing users will only be allowed to withdraw their tokens. NYAG has no authority to bar the exchange from serving the other states, but CoinEx agreed to the condition as part of the settlement. As some users revealed in February, the exchange had already made peace with its U.S. exit and had informed its users of the impending move.

“Today’s agreement should serve as a warning to crypto companies that there are hefty consequences for ignoring New York’s laws. My office will continue to crack down on crypto companies that brazenly disregard the law, mislead investors, and put New Yorkers at risk,” the NYAG commented.

James has continued to rid New York of virtual asset service providers (VASPs) that she says flout the state’s laws. In May, she secured a $4.3 million settlement with Coin Café, a BTC wallet she accused of operating without registration. In March, she sued KuCoin exchange over its failure to register.

James has been accused of wiping out the smaller players to pave the way for the big VASPs. Coinseed founder Delgerdalai Davaasambuu accused her of giving Gemini, Kraken, Coinbase (NASDAQ: COIN), and other big exchanges a free pass in New York while booting out smaller companies. Davaasambuu even launched an ERC-20 token called FLJ (F*ck Letitia James) to protest the NYAG.

Follow CoinGeek’s Crypto Crime Cartel series, which delves into the stream of groups—from BitMEX to Binance, Bitcoin.com, Blockstream, ShapeShift, Coinbase, Ripple,
Ethereum, FTX and Tether—who have co-opted the digital asset revolution and turned the industry into a minefield for naïve (and even experienced) players in the market.