New York Attorney General, Letitia James, has reached a pivotal decision to settle a case involving Coin Cafe, a trading platform. The attorney’s office was able to retrieve $4.3 million from Coin Cafe, which had fraudulently promised investors free Bitcoin storage on company-hosted wallets. However, the platform had imposed excessive user fees secretly instead. Coin Cafe has officially confessed to deceiving investors by consistently implementing and increasing fees without proper disclosure to them. Shockingly, one customer was charged over $10,000, and another over $51,000, in fees within a month.
Attorney General James emphasized the urgent need for better regulation in the cryptocurrency industry, stressing that it requires the same meticulous scrutiny as traditional financial institutions. “Every New Yorker deserves to be confident that their investments are protected with commonsense regulations and real oversight,” she said.
Coin Cafe, located in Brooklyn, failed to comply with the legal requirement of registering with the New York Office of the Attorney General (OAG) as a commodity broker-dealer.
Coin Cafe has also consented to pay rebates to the roughly 340 investors who were duped by their practices; the refund totals more than $508,000 and includes individuals who were unaware of the platform’s hidden fees. The company charged such excessive fees that it entirely exhausted some customers’ accounts. The firm initiated storage fees for its wallet service in September 2020 and repeatedly adjusted its fee structure four times, always resulting in higher customer charges. Interestingly, Coin Cafe either neglected to communicate these fee increases or remained ambiguous to its investors about the adjustments.
The most significant modification made to the fee structure occurred in October 2022, and the platform has now agreed to address the financial harm it has caused.
The New York Attorney General’s Office is renowned for its robust approach to eliminating illegitimate activities within the digital currency ecosystem, having reached settlements with numerous prominent cryptocurrency firms in recent years. Among those cases was an investigation and settlement with Tether Holdings Limited, the issuer of the widely-used stablecoin USDT. The New York Attorney General’s Office aims to ensure companies adhere to regulatory requirements and safeguard investors’ and consumers’ interests.
The article cited CNBC as the featured image source and TradingView.com as the chart source, and it did not mention bitcoinist.com.