New York Halts Operations of CoinEx Exchange, Seizes $1.7 Million in Crypto Assets
The Hong Kong-based cryptocurrency exchange, CoinEx, has been ordered to cease all activities in New York by Attorney General Letitia James. The move comes as a result of the exchange’s alleged failure to register as a broker-dealer and its misrepresentation as a legitimate crypto trading platform. The Attorney General’s office announced on June 15 that over $1.7 million worth of crypto assets belonging to CoinEx have been confiscated.
The legal action stems from a previous lawsuit filed in February, where the New York attorney general accused CoinEx of deceiving investors by falsely claiming to be an authorized exchange while neglecting to comply with local regulatory requirements.
Under the terms of the agreement, CoinEx is now prohibited from engaging in the buying or selling of securities and commodities within New York and is barred from providing its services to residents of the state. In addition, the exchange must implement measures to prevent access by New York IP addresses and is forbidden from accepting new customers from the United States.
As part of the settlement, CoinEx is obligated to return over $1.1 million to 4,691 investors from New York and pay a fine of over $600,000 to the state. To facilitate the reimbursement process, eligible investors will have the option to retrieve their funds directly from the exchange within the next 90 days. Subsequently, those qualifying for reimbursement will be able to request their funds in fiat currency by contacting coinexrefund@ag.ny.gov. The funds to be reimbursed include cryptocurrencies or their equivalent cash value held in accounts as of April 25, 2023.
Attorney General Letitia James emphasized the consequences faced by crypto companies that disregard New York’s laws, stating that her office will continue to crack down on such entities that endanger investors and flout regulations.
CoinEx users affected by the shutdown and asset seizure have been provided with a window of opportunity to reclaim their cryptocurrency holdings. However, after the designated period, eligible investors will be able to request compensation in fiat currency. The lawsuit against CoinEx, filed on February 22, accused the exchange of engaging in fraudulent activities and violating New York’s stringent Martin Act, which combats fraudulent practices. The complaint specifically identified tokens such as Amp (AMP), LBRY Credits (LBC), Rally (RLY), and Terra (LUNA) as assets falling under both the commodities and securities categories.
