New York Attorney General sues CoinEx for unregistered brokerage activity
“The days of crypto companies like CoinEx acting like the rules do not apply to them are over. My office will continue to protect New York investors and ensure our state’s laws are followed.”
New York Attorney General Letitia James has filed a complaint against CoinEx for failing to register as a securities and commodities broker-dealer and for falsely representing itself as a crypto exchange.
The enforcement action is taking place after the Office of the Attorney General (OAG) was able to buy and sell cryptocurrencies on CoinEx in New York, although the company is unregistered in the state: this is a violation of New York’s Martin Act.
The goal of the lawsuit is to permanently stop CoinEx from operating in New York through its website and mobile apps.
New York Attorney General Letitia James commented: “Our laws are designed to protect New Yorkers, and when companies ignore them, they put residents, investors, and businesses at risk. The days of crypto companies like CoinEx acting like the rules do not apply to them are over. My office will continue to protect New York investors and ensure our state’s laws are followed.”
NYAG says CoinEx is a broker, not an exchange
CoinEx is a virtual currency trading platform that allows investors to buy and sell cryptocurrency through its website and app. On its platform, CoinEx investors can buy and sell popular virtual currencies, including AMP, LUNA, LBC, and $RLY, which are securities and commodities.
New York law requires securities and commodities brokers to register with the state, which CoinEx failed to do. The 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, which CoinEx charged a fee for.
In addition, CoinEx claimed to be an exchange, but is not registered with the Securities and Exchange Commission (SEC) as a national securities exchange or appropriately designated by the Commodity Futures Trading Commission (CFTC) as is required under New York law.
CoinEx also failed to comply with a subpoena issued by OAG to provide more information about its digital asset trading activities in the state.
NY Attorney General James seeks a court order that stops CoinEx from misrepresenting that it is an exchange, prevents the company from operating in New York, and directs CoinEx to implement geo-blocking based on IP addresses and GPS location to prevent access to CoinEx’s mobile app, website, and services from New York.