Letitia James Blocks CoinEx Over Registration Violation

Attorney General Letitia James has prohibited the Hong Kong-based crypto exchange CoinEx from operating in New York.

The exchange allegedly failed to register as a securities and commodities brokerage, according to an announcement released on June 15.

The settlement ended a lawsuit filed against CoinEx in February by the state of New York, which accused the company of misrepresenting itself as an exchange and neglecting to register with local authorities.

The announcement states, “As part of today’s consent order, CoinEx is prohibited from offering, selling, or purchasing securities and commodities in New York and from making its platform available in the state.”

Following the terms of the agreement, over $1.1 million will be returned to 4,691 New York investors, and over $600,000 will be paid to the state as penalties.

CoinEx must also implement geo-blocking to prevent access from New York-based IP addresses. Additionally, CoinEx is prohibited from creating new accounts for U.S. customers.

“Today’s agreement should warn crypto companies that disregarding New York’s laws carries severe consequences.

James noted in the announcement that his office will continue to crack down on crypto companies that violate the law, mislead investors, and place New Yorkers at risk.

Within the next 90 days, CoinEx consumers can recover crypto funds directly from the exchange.

After this period, eligible investors can email [email protected] to receive funds in fiat currency.

According to the announcement, investors with cryptocurrency or cash equivalents in their accounts as of April 25, 2023, will be refunded.

James filed a lawsuit against CoinEx in the New York Supreme Court on February 22 for allegedly engaging in “repeated and persistent fraudulent practices” and violating the state’s Martin Act, one of the strictest anti-fraud statutes.

In the complaint, James categorized several tokens as “both commodities and securities,” including Amp, LBRY Credits (LBC), Rally (RLY), and Terra.