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US Crypto Clampdown Continues as New York Attorney General Sues CoinEx

2 mins
Updated by Geraint Price
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In Brief

  • New York State’s Attorney General is suing CoinEx for operating without registration.
  • CoinEx allowed trading of tokens that are already declared as securities by the SEC
  • Web3 firms are moving away from the U.S due to the country's strict stance against cryptocurrencies.
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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).

Screenshot showing CoinEx identifying itself as "Global Crypto Exchange."
Source: Google search

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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In adherence to the Trust Project guidelines, BeInCrypto is committed to unbiased, transparent reporting. This news article aims to provide accurate, timely information. However, readers are advised to verify facts independently and consult with a professional before making any decisions based on this content.

Harsh Notariya
Harsh started investing in crypto during the 2021 bull market. He took the opportunity of the market crash in May to learn more about Bitcoin and blockchain technology. Since...