CoinEx leaves New York after paying $1.7 million for claiming to be a crypto exchange

While CoinEx expands further in the Asia Pacific, taking advantage of Hong Kong’s new regulatory approach to digital assets, the cryptocurrency platform is finishing up its legal issues in the United States, especially in New York.

The New York Attorney General, Letitia James, has just announced it has “recovered more than $1.7 million from CoinEx for failing to register as a securities and commodities broker-dealer and for falsely representing itself as a crypto exchange”.

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

CoinEx is a broker-dealer, not a crypto exchange, says NYAG

The agreement resolves the NY lawsuit against CoinEx and requires the company to refund thousands of New York investors more than $1.1 million and pay more than $600,000 in penalties to the state.

CoinEx is banned from offering, selling, or purchasing securities and commodities in New York and is prohibited from making its platform available in the state. The crypto platform publicly announced that it would withdraw its platform and services from the United States.

The firm is a Hong Kong-based virtual currency trading platform that allows investors to buy and sell cryptocurrency through its website and mobile app.

New York law requires securities and commodities brokers to register with the state, which CoinEx failed to do. An investigator from the Office of the Attorney General (OAG) was able to create an account with CoinEx using a computer with a New York-based IP address to buy and sell digital tokens although CoinEx was not registered with the state.

The agreement requires CoinEx to provide full refunds totaling $1,172,971.50 to 4,691 New York investors. Investors can receive their refund in the form of cryptocurrency directly from CoinEx over the next 90 days.

After 90 days, eligible investors can receive their refund as U.S. currency from OAG by emailing [email protected]. Each investor will be refunded the amount of cryptocurrency or the cash equivalent of the cryptocurrency they held in their accounts as of April 25, 2023.

In addition, CoinEx must implement geoblocking to prevent New York IP addresses from accessing their platform. CoinEx is also prohibited from creating any new accounts for U.S. customers and existing U.S. customers can only withdraw their crypto from the platform.

CoinEx launches BitHK in Hong Kong, applies to VASP license

In the meantime, CoinEx launched a professional crypto trading platform that caters specifically to users in Hong Kong.

Going by the name of BitHK, the Hong Kong subsidiary will submit its license application as a Virtual Asset Service Provider (VASP) to the SFC on June 1, the effective date of the Guidelines for Virtual Asset Trading Platform Operators. BitHK will continue to utilize CoinEx’s proprietary trade matching engine, which enables efficient crypto transactions and seamless trading experiences.

Hong Kong residents will be able to leverage BitHK to engage in spot trading and store crypto assets on the platform, which is currently available in both Traditional Chinese and English.

Established in 2017, the platform provides a range of services, including spot and margin trading, futures, swaps, automated market maker (AMM), and financial management services for over 5 million users across over 200 countries and regions.

Founded with the initial intention of creating an equal and respectful cryptocurrency environment, CoinEx is dedicated to dismantling traditional finance barriers by offering easy-to-use products and services to make crypto trading accessible for everyone.