The Attorney General of New York is seeking a court order to remove the exchange from the state and to restrict any internet addresses originating in New York. New York Attorney General Letitia James has filed a lawsuit against cryptocurrency exchange CoinEx. Alleging that the company falsely marketed itself as an exchange by failing to register as a securities and commodities broker-dealer in the state.
On Feb. 22, James filed a 38-page petition in the New York Supreme Court alleging CoinEx “engaged in repeated and persistent fraudulent acts” and violated the state’s Martin Act. Regarded as one of the most stringent anti-fraud and securities regulatory statutes in the United States.
She further claimed CoinEx listed many tokens that qualified as “both commodities and securities,” listing Amp, LBRY Credits (LBC), Rally (RLY), and Terra as examples.
When crypto platforms disregard our laws, they put New Yorkers at risk.— NY AG James (@NewYorkStateAG) February 22, 2023
We're seeking to stop @coinexcom from operating in New York and will continue to protect people from the dangers of the cryptocurrency industry.
In a Feb. 22 statement, James stated that CoinEx is not registered with the Securities and Exchange Commission or the Commodities Futures Trading Commission, “as is needed by New York law,” to sell the tokens. The Attorney General’s Office allegedly constructed a CoinEx account using a computer and internet address in New York and claimed to be able to trade on the site.
“The days of crypto firms operating as though the regulations do not apply to them are passed,” she continued.
The petition also claims that CoinEx failed to comply with an Attorney General’s Office subpoena issued on December 22 to “give testimony concerning 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.”
James requests a court order to ban CoinEx from presenting itself as an exchange and operating in the state by directing it to Geoblock IP addresses and GPS location data originating in New York.