In a settlement with the New York Attorney General Letitia James, cryptocurrency exchange CoinEx, also known as Vino Global Ltd, has agreed to pay $1.8 million and accept a ban from operating in New York.
The settlement resolves a lawsuit filed by James, alleging that CoinEx operated illegally by failing to register with the state. Pending judicial approval, the proposed settlement marks a significant development in the regulation of cryptocurrency exchanges.
Prohibited Operations and Refunds CoinEx faces restrictions and financial obligations under the settlement agreement
CoinEx sees a ban on securities and commodities transactions in New York, ineligibility to offer its platform within the state, a payment of $1.17 million in refunds to 4,691 investors, possible reduction of refund amounts if investors withdraw crypto assets within 90 days, and an imposition of a $626,000 fine.
CoinEx does not admit any wrongdoing in relation to the allegations. The settlement is reached without an admission of guilt or liability by CoinEx.
Unregistered crypto platforms pose risks to investors, consumers, and the broader economy. The settlement serves as a warning to other crypto companies. Companies failing to comply with New York’s laws may face significant penalties.
Following the settlement agreement, there has been no immediate response from CoinEx or its legal representatives. Accordingly, it remains uncertain whether the exchange will choose to address the settlement at a later time.
CoinEx Lawsuit as Part of Broader Regulation Efforts
The lawsuit against CoinEx is part of Attorney General James’ efforts to regulate the crypto industry.
In February, a lawsuit was filed by James. Consequently, James aims to rein in what she refers to as “shadowy” crypto companies. Specifically, the lawsuit alleges violations of the Martin Act, which is a state law designed to combat financial fraud.
Gary Gensler, chair of the U.S. Securities and Exchange Commission, has set his sights on the crypto industry. Furthermore, the SEC has recently filed lawsuits against Binance, the largest crypto platform, and Coinbase, the largest U.S. crypto platform. These lawsuits specifically accuse both platforms of operating as exchanges without registering with the regulatory agency.
Regulatory Scrutiny Beyond New York, Extends To Other Prominent Crypto Platforms
However, the settlement between CoinEx and the New York Attorney General signals a significant development in the regulation of cryptocurrency exchanges. Moreover, the agreement includes a financial penalty, refunds to investors, and a ban on operations in New York.
Hence, this outcome serves as a warning to other crypto companies about the potential consequences of non-compliance with state laws. Regulatory scrutiny of the crypto industry extends beyond New York, as evidenced by recent actions taken by the SEC against major platforms.