Crypto Exchange CoinEx Sued by New York Attorney for Transacting Business Illegally

Crypto Exchange CoinEx Sued by New York Attorney for Transacting Business Illegally
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New York Attorney General, Letitia James, has sued cryptocurrency exchange CoinEx accusing the platform of transacting business illegally as it did not register with the state.

The United States has intensified its regulatory crackdown on crypto companies over the past few months. After the collapse of FTX, US regulatory agencies like the U.S. Securities and Exchange Commission (SEC), have issued stingent policies making it harder for digital asset firms to participate in the mainstream finance system. Recently, crypto exchange Kraken agreed to shut down its U.S. cryptocurrency staking service and pay $30 million in penalties to the SEC.

Another Crypto Company Under Regulatory Scrutiny

Amid increasing regulatory scrutiny, Letitia James filed the lawsuit against CoinEx alleging the crypto exchange failed to register with the state and that it was indulging in business transactions illegally. The attorney general alleged the firm indulged in violations of the Martin Act, which is used to curb economic fraud citing, “CoinEx engaged in repeated and persistent fraudulent practices”.

She added that the exchange also failed to register as a commodity broker-dealer, securities broker or securities dealer prior to getting involved in the sale and purchase of tokens. The civil lawsuit which was filed in a New York state court in Manhattan suggested CoinEx was operating as a global crypto exchange “without having any proper state permission”.


She also mentioned that the firm failed to comply with a subpoena sent to it last month about CoinEx’s testimony regarding the digital assets and pertaining trade activities. In an official statement, James asserted,

“The days of crypto companies like CoinEx acting like the rules do not apply to them are over.”

Increasing Crypto Crackdown

In January, the SEC hit Genesis and Gemini, two popular crypto exchanges, with charges related to unregistered securities. Last year, the SEC reportedly started an investigation into Yuga Labs, the company behind Bored Ape Yacht Club (BAYC), for possible violations of investor disclosure rules surrounding sales of its non-fungible tokens (NFT).

It is not just the SEC, but various other US entities such as the Commodity Futures Trading Commission (CFTC) is also pursuing firms that fail to register crypto products that qualify as derivatives.  In October, the Treasury Department’s Office of Foreign Assets Control (OFAC) and Financial Crimes Enforcement Network (FinCEN) slapped a penalty on crypto exchange Bittrex for sanctions violation.


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