New York Attorney General (NYAG), Letitia James, has secured a settlement of $4.3 million from a Brooklyn-based cryptocurrency company, Coin Cafe for defrauding investors. According to the announcement, the trading platform promised investors free Bitcoin (BTC) storage on its hosted wallets but instead of fulfilling its promise, the company secretly charged the investors exorbitant and undisclosed fees.
Notably, the settlement comes after an investigation by the Attorney General’s Office (OAG) found that Coin Cafe made false claims about its business practices, including misrepresenting its ownership structure and inflating the value of its assets.
NYAG’s Action Against Coin Cafe
Per the enforcement action, Coin Cafe will reach out to the US-based investors it has defrauded and refund all the fees collected from them. Meanwhile, Coin Cafe agreed to OAG’s discoveries of charging investors increased fees repeatedly without properly informing them. As such, the trading platform will pay all the investors who were misled, not excluding the over 340 New York investors who were charged exorbitant fees without their knowledge.
In addition to the fine, Coin Cafe has been ordered to implement stronger risk management practices and work closely with regulators to ensure compliance with all regulatory requirements. Also, the company must maintain transparency with its investors and stakeholders about its activities and any potential risks involved.
However, the Attorney General emphasized the importance of holding companies accountable for their actions, stating that “her office will continue to protect investors and take swift action against those who seek to defraud them”. Interestingly, the settlement with Coin Cafe sends a clear message that fraudulent behavior will not be tolerated.
Ultimately, this settlement is a positive step toward promoting transparency and trust in the cryptocurrency industry. As the industry continues to grow, it is crucial that companies prioritize their investors and uphold ethical standards. Likewise, the actions taken by Letitia James serve as a reminder of the consequences of fraudulent behavior and the importance of maintaining trust in the marketplace.
Taking Actions Post-FTX Collapse
Notably, the collapse of the defunct FTX exchange and subsequent loss of investors’ funds has brought about a lot of change in the blockchain ecosystem. As reported by InsideCrypto, Letitia James wrote a letter to the US Congress on how individuals’ retirement funds can be protected from associated digital asset risks.
Recall that early this year, NYAG sued Alex Mashinsky, the former CEO of Celsius Network for defrauding Celsius’ investors. James compelled Alex to make restitution, disgorgement, and compensatory payment to everyone affected.
