Cryptocurrency trading platform, CoinEX, is set to halt its operations in New York after agreeing to pay $1.7 million in settlement to the Office of the New York Attorney General (NYAG). The Hong Kong-based exchange has also been ordered to refund investors.
CoinEX has been accused by New York's Attorney General Letitia James of failing to register as a securities and commodities broker-dealer and for allegedly misrepresenting itself as a crypto exchange. NYAG first sued the exchange in February.
CoinEX to Refund $1.1M to Investors
Giving a breakdown of the settlement, NYAG said CoinEX is to set aside $1.1 million from the agreed amount to refund thousands of investors, with $600,000 in penalty payment going to New York. The state prosecutor's office added that CoinEX agreed to pay the refunds within three months for the amounts held as of April 25. James described the settlement as a warning to other crypto companies.
"Unregistered crypto platforms pose risks to investors, consumers, and the broader economy," the New York chief prosecutor said, adding that "today's agreement should serve as a warning to crypto companies that there are hefty consequences for ignoring New York's laws."
According to James, CoinEx flaunted The Martin Act, a law established in 1921 and considered one of the most rigorous anti-fraud regulations in the US. The law makes it illegal to sell or purchase securities and commodities without registration.
Furthermore, CoinEX has been banned from creating new accounts for US customers, but existing customers can withdraw their crypto from the platform. The exchange must also implement geo-blocking to prevent new New York IP addresses from accessing its web and app trading platforms.
New York Laws for Crypto
CoinEX is not the only exchange facing enforcement action from state prosecutors in New York. Attorney General James secured $4.3 million in May from Coin Cafe, a cryptocurrency company based in Brooklyn. Similarly, in March, the authority filed similar charges against KuCoin.
In total, the NYAG has recovered $500 million from the cryptocurrency industry amid efforts to increase oversight and regulations in the sector, the authority said in the statement. The Attorney General also expressed the intention to propose to state legislators a bill for the regulation of digital assets.
This article was written by Jared Kirui at www.financemagnates.com.
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