Falsely representing itself as an exchange, and failing to register as a broker-dealer in securities and commodities are the main charges the platform is facing. The prosecutor is calling on this occasion to block the possibility of trading on CoinEx, for New York State citizens.
Heavy artillery against cryptocurrency exchange CoinEx
Letitia James, who is the New York State Attorney General, has decided to counter the practices of the CoinEx exchange and file a lawsuit against it. The 38-page document reached the New York Supreme Court on February 22 and is currently pending. As it reads in the motion, the platform “engaged in repeated and persistent fraudulent practices,” and seriously violated the provisions of the Martin Act. That document is considered the key, and most stringent, set of anti-fraud regulations.
Among the allegations, there was also a claim that could have a wider impact on the cryptocurrency market. It said that the platform allowed the exchange of tokens that “qualify as both commodities and securities.” The following were cited as examples: Amp (AMP), LBRY Credits (LBC), Rally (RLY) and Terra Luna (LUNA).
A number of charges against CoinEx
In a February 22 statement, Prosecutor Letitia James reported that CoinEx had ignored the execution of basic steps to legalize its operations. The exchange was not registered with the Securities and Exchange Commission (SEC) or the Commodity Futures Trading Commission (CFTC).
In doing so, the Attorney General was tempted to create an account on CoinEx, using a computer and IP address located in New York. This procedure was successful and allowed potential purchases of virtual coins, on an unregistered entity. The case further decided to comment as follows:
“The days of cryptocurrency companies like CoinEx acting as if the rules don’t apply to them are over.”
The filing also included words indicating that representatives of the exchange were given a chance to explain themselves, which they apparently did not take advantage of:
“CoinEx was compelled by subpoena to appear for examination under oath on January 9, 2023, and failed to appear. CoinEx’s failure to appear is evidence that CoinEx has engaged in fraudulent practices.”
How big is CoinEx
The CoinEx exchange is one of the entities of average size. Its averaged 24-hour trading volume, at the time of this writing, slightly exceeds $27 million. In doing so, the platform allows 594 different coins to be exchanged. It also recently presented an abbreviated proof of reserves. It shows that more than 35% of the capital held is in Tether (USDT). Just over 26% is Ethereum (ETH). In third place, however, is Bitcoin (BTC) with a value of nearly 14%.
