CoinEx, a Hong Kong-based cryptocurrency exchange, has reached an agreement with the office of the New York Attorney General (NYAG) following a lawsuit filed against the exchange for operating illegally in February 2023.
This development marks a significant milestone in the legal proceedings, bringing about financial implications and operational restrictions for CoinEx.
Agreement Details and Financial Settlement
In the settlement, CoinEx has agreed to make a payment of over $1.7 million and will face a prohibition from offering its services in New York. The agreement entails refunding more than $1.1 million to over 4,600 New York investors and paying penalties amounting to $600,000 to the state.
Over the next 90 days, CoinEx will facilitate the refund process directly to investors in cryptocurrency.
Operational Restrictions and Geo-blocking Measures
In addition to the financial settlement, CoinEx will face operational restrictions as a result of the agreement. Authorities will bar the exchange from engaging in the buying, selling, or offering of securities and commodities in New York.
Additionally, the company will face a prohibition on opening new customer accounts in the United States. To enforce these restrictions, CoinEx will implement geoblocking measures to limit access to its platform for users with New York IP addresses.
NYAG’s Stance on Cryptocurrency Regulations
The settlement between CoinEx and the NYAG’s office not only concludes the lawsuit initiated earlier this year but also highlights the NYAG’s commitment to promote stronger regulations in the cryptocurrency industry.
Attorney General Letitia James emphasized the need for more robust rules, citing instances such as the recent order for CoinEx to refund over $4 million to users, who were misled by the exchange’s “free” bitcoin wallet storage service.
CoinEx Looking Ahead On Service Withdrawal – CRPTO Act
The agreement reached with the NYAG’s office brings clarity to the legal situation surrounding the exchange’s operations.
Moreover, the NYAG’s proposal of the Crypto Regulation, Protection, Transparency, and Oversight (CRPTO) Act underscores the regulator’s intent to establish stricter regulatory measures, aiming to combat fraud and criminal activities prevalent in the cryptocurrency industry.