New York’s Attorney General is suing CoinEx in the latest move by U.S. regulators to clamp down on Web3 firms.
New York State Attorney General (NYAG) Letitia James, announced on Twitter that she is suing the cryptocurrency exchange for illegally operating in New York.
She calls it a “wake-up call” for crypto platforms and seeks to protect New Yorkers from the “dangers of the cryptocurrency industry.”
NYAG Accuses CoinEx of Operating Without Registration
According to the lawsuit, CoinEx violated the Martin Act and did not comply with a subpoena from the attorney general’s office.
The filing explains, “The Martin Act makes it unlawful to represent oneself as an exchange or use any abbreviation of the word exchange in one’s name while engaged in the business of selling securities or commodities, unless registered or designated to do so.”
CoinEx refers to itself as a “global cryptocurrency exchange” on its website. It also has “Ex” on the brand name, indicating it is an exchange, although it has not registered with the Securities and Exchange Commission (SEC) or Commodity Futures Trading Commission (CFTC).
The platform allows the trading of tokens such as Amp, Library Credits, Terra Luna, and Rally. The NYAG alleges that the exchange violates the law by allowing these tokens, as the SEC already deemed them securities.
The NYAG served a subpoena asking CoinEx representatives to provide testimony as a part of the investigation on Jan. 9. But the company failed to show up for the deposition.
For these violations, the NYAG requested the court to order CoinEx with a permanent injunction and restrict access to its websites, mobile apps, and other services to citizens of New York. Additionally, the NYAG wants to receive an accounting of all the fees that CoinEx received from New Yorkers.
American Regulators Punish Web3 Firms
Recently, the regulatory authorities have been challenging crypto firms. Along with filing a lawsuit against CoinEx, the NYAG James has also objected to the Binance acquisition of Voyager Digital assets.
And a U.S. District Judge denied a motion to dismiss a lawsuit against Dapper Labs, which alleged that the NBA Top Shot NFTs are securities.
This month, the SEC fined Kraken $30 million and ordered it to shut down its staking facilities. Paxos, the issuer of BUSD, terminated its relationship with Binance after receiving warnings from SEC.
Due to regulators’ anti-crypto stance in the U.S., Web3 firms are now considering moving to friendlier countries.
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