NY bans CoinEx, seizes $1.7M.

Amidst a widespread crackdown on cryptocurrency regulation in the United States, the office of Attorney General Letitia James in the state of New York has intensified its scrutiny of cryptocurrency firms. CoinEx, a global cryptocurrency exchange launched in 2017, is the latest to be on the radar and is now banned from offering its trading services to New York residents. According to an announcement from the office of the New York Attorney General, more than $1.7 million has been recovered from the exchange for failing to register as a securities and commodities broker-dealer.

CoinEx Banned in New York

The New York Attorney General stated that CoinEx falsely represented itself as a crypto exchange luring investors without the proper registration.

Following the resolution, approximately $1,172,971 in different crypto assets will be refunded to 4,691 New York investors. The remaining $600k is expected to be paid in penalties to the New York state.

Notably, the New York AG informed the relevant investors that they will receive their refunds directly from CoinEx in the next 90 days. Afterward, the AG’s office intends to refund the remaining investors through US currency as per the snapshot taken on April 25, 2023.

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🚨There are serious consequences for ignoring New York laws.

As a result of our lawsuit, cryptocurrency platform @coinexcom is banned from operating in New York and the rest of the country and will pay $1.7 million in penalties and refunds for impacted New Yorkers. https://t.co/U3wkdfHu3o

— NY AG James (@NewYorkStateAG) June 15, 2023

CoinEx is among the many cryptocurrency firms that have been caught by the New York Attorney General for operating without the proper registration. AG Letitia ordered CoinEx to implement geo-blocking measures to prevent New York IP addresses from accessing its platform. Additionally, the exchange has been ordered to cease creating new U.S. customer accounts. Meanwhile, United States CoinEx customers can only withdraw their digital assets from the exchange without making new deposits.

“Unregistered crypto platforms pose a risk to investors, consumers, and the broader economy,” the New York AG noted. “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.”

Following the case on CoinEx, the state of New York has so far recovered more than $500 million from the cryptocurrency industry for failing to comply with local financial regulations.

Bigger Picture

The office of the New York Attorney General has charged several cryptocurrency exchanges for listing and providing services to unregistered securities. Interestingly, the state of New York has already publicly alleged that Ethereum ( ETH ) is a security. Earlier last month, the New York AG’s office proposed an array of regulations for the cryptocurrency industry to protect investors.

According to the regulations, cryptocurrency firms should avoid conflicts of interest that intend to lure investors to unreasonable investment products, as Terra Luna did with Anchor protocol before its collapse.