CoinEx, a cryptocurrency exchange, has been served with a lawsuit by New York’s Attorney General Letitia James, who contends that the company falsely represented itself as an exchange by failing to register as a securities and commodities broker-dealer in the state. James’s allegations can be found in the lawsuit.
James submitted a petition to the New York Supreme Court on February 22 that consisted of 38 pages, alleging that CoinEx “engaged in repeated and persistent fraudulent practices” and violated the state’s Martin Act, which is widely regarded as one of the strictest anti-fraud and securities regulation laws in the United States. The petition was filed in response to a previous complaint that CoinEx had violated the Martin Act.
In addition to this, she said that CoinEx was a marketplace that offered a variety of tokens, including Amp (AMP), LBRY Credits (LBC), Rally (RLY), and Terra, that qualified as “both commodities and security” (LUNA).
James noted in a statement that CoinEx is not registered with the Securities and Exchange Commission or the Commodity Futures Trading Commission, “as is necessary under New York law,” in order to sell the tokens. James made this statement on February 22.
The Attorney General’s Office is said to have opened a CoinEx account using a computer and internet address situated in the state of New York and to have been able to engage in trading on the platform.
She went on to say that the days of cryptocurrency firms such as CoinEx behaving as if the regulations did not apply to them are gone.
In addition, the petition alleges that CoinEx did not comply with a subpoena that was sent by the Attorney General’s Office on December 22. The subpoena required CoinEx to “give testimony about the virtual asset trading operations of its platform.”
“CoinEx was compelled by subpoena to appear for an examination under oath on January 9, 2023, and failed to appear. CoinEx’s non-appearance is prima facie proof that CoinEx has engaged in the [mentioned] fraudulent practices.” [Citation needed] “CoinEx was compelled by subpoena to appear for an examination under oath on January 9, 2023, and failed to appear.”
James is seeking a court order to stop CoinEx from marketing itself as an exchange and preventing it from operating in the state by ordering it to geoblock internet addresses and GPS location data originating from New York. The petition can be found here. James is also seeking a court order to prevent CoinEx from operating in the state.