Cryptocurrency platform CoinEx forced to shut U.S. operations, fined $1.7M

June 16, 2023 Rob Abruzzese

NY Attorney General Letitia James. Photo: Hans Penink/AP.

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In a significant setback to Hong Kong-based virtual currency trading platform CoinEx, the company has been directed to cease operations in the United States following a $1.7 million fine for operating illegally.

The NY Attorney General’s Office brought this violation to light, accusing CoinEx of failing to register as a securities and commodities broker-dealer, in addition to misleadingly representing itself as a cryptocurrency exchange.

CoinEx is now mandated to refund over $1.1 million to thousands of its New York investors, while also paying upwards of $600,000 in penalties to the state. As per the order, CoinEx has been banned from offering, selling, or purchasing securities and commodities in New York. Moreover, it is prohibited from operating its platform in the state. Following this legal action, CoinEx announced its intention to withdraw its services from the United States.

CoinEx, a platform that facilitates the buying and selling of cryptocurrency through its website and mobile app, violated New York law by neglecting to register with the state. An investigator from the Office of the Attorney General (OAG) was able to establish an account with CoinEx using a computer with a New York-based IP address, thereby buying and selling digital tokens even though CoinEx was not registered with the state.

“Unregistered crypto platforms pose a risk to investors, consumers, and the broader economy,” stated Attorney General Letitia James. “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.”

Under the terms of the agreement, CoinEx must provide full refunds totaling $1,172,971.50 to 4,691 New York investors. Over the next 90 days, these investors can receive their refund in cryptocurrency directly from CoinEx. After 90 days, eligible investors can opt for their refund in U.S. currency by contacting the OAG.

Furthermore, CoinEx is required to implement geoblocking to prevent New York IP addresses from accessing their platform and has been prohibited from creating any new accounts for U.S. customers. Existing U.S. customers will only be able to withdraw their cryptocurrency from the platform.

Attorney General James continues to enforce New York laws in the cryptocurrency industry vigilantly. She has recovered over $500 million from the industry for violating state laws.