Crypto Platform CoinEx Settles With NYAG for Registration Failures | Practical Law

Crypto Platform CoinEx Settles With NYAG for Registration Failures | Practical Law

New York Attorney General (NYAG) Letitia James entered into a stipulation and consent order with crypto trading platform CoinEx resolving charges that CoinEx failed to register as a securities or commodities broker-dealer with the Attorney General of the State of New York (OAG) and for falsely represented itself as a crypto exchange despite being unregistered with the SEC or CFTC.

Crypto Platform CoinEx Settles With NYAG for Registration Failures

Practical Law Legal Update w-039-8723 (Approx. 5 pages)

Crypto Platform CoinEx Settles With NYAG for Registration Failures

by Practical Law Finance
Published on 22 Jun 2023USA (National/Federal)
New York Attorney General (NYAG) Letitia James entered into a stipulation and consent order with crypto trading platform CoinEx resolving charges that CoinEx failed to register as a securities or commodities broker-dealer with the Attorney General of the State of New York (OAG) and for falsely represented itself as a crypto exchange despite being unregistered with the SEC or CFTC.
On June 15, 2023, New York Attorney General (NYAG) Letitia James entered into a stipulation and consent agreement in the Supreme Court of the State of New York with Vino Global Limited d/b/a CoinEx (CoinEx), a virtual currency (VC) trading platform that allows investors to buy and sell cryptocurrency on its website and app, resolving charges brought by the NYAG against CoinEx for failing to register with the Office of the Attorney General of the State of New York (OAG) as a securities or commodities broker-dealer and for falsely representing itself as a crypto exchange despite being unregistered with the SEC and the CFTC.
According to the NYAG, staff from the OAG's office was able to buy and sell cryptocurrencies on CoinEx in New York although the company is unregistered in the state, in violation of the New York Martin Act (N.Y. Gen. Bus. Law § 352 et seq.), which requires entities selling securities from New York State or to New York residents to register as securities dealers and/or commodities broker-dealers (see Practice Note, Enforcement Proceedings Under New York's Martin Act).
The NYAG's complaint listed various digital tokens, including AMP (an Ethereum token that is part of the Flexa Network), LBRY Credits (LBC), LUNA (the native token for the Terra blockchain), and $RLY (the native token of the Rally network), that are sold on CoinEx's platform despite, as the complaint asserts, qualifying as both commodities and securities under New York law. However, CoinEx has not filed a registration statement with the OAG in order to operate as a commodity broker-dealer or a securities broker or dealer.
Additionally, according to the complaint, while CoinEx claims to be an exchange, it is not registered with the SEC as a national securities exchange or designated as a contract market by the CFTC, as required under New York law. Additionally, CoinEx failed to comply with a subpoena issued by the OAG in January 2023 to provide testimony concerning the virtual asset trading activities on its platform.
The CoinEx stipulation and consent order resolves the charges brought by the NYAG against CoinEx. CoinEx stipulated in the order that it held itself out as an exchange and operates a website through which multiple cryptocurrencies are sold. As part of the stipulation and consent order, CoinEx:
  • Terminated access to its services for US users.
  • Prohibits US users from registering for new CoinEx accounts.
  • Restricts access of US users to its platform to allow only for asset withdrawals.
  • Must pay $1.8 million in penalties.