The Office of the New York Attorney General said May 18 that it successfully took action against crypto company Coin Cafe, which surrendered $4.3 million after the agency found that it charged wallet users extremely high fees.
The agency stated that Coin Cafe advertised its wallet service as free and did not fully inform users of its actual fee structure.
Overcharging users
The company reportedly charged New York residents tens of thousands of dollars in fees and depleted certain user account balances entirely.
Coin Cafe changed its fee structure four times and introduced a particularly gratuitous fee increase in October 2022. At that time, it began to charge users the greater of 7.99% or $99 per month if they did not transact crypto over a 30-day period.
Coin Cafe will now pay restitution to investors, including $508,000 to 340 individuals in the state of New York. The company will be allowed to continue operating but must limit monthly fees to 0.002% and must adequately inform users of all fees.
New York has strict regulations
Unlike some other companies targeted by the New York Attorney General, Coin Cafe successfully obtained the state’s BitLicense in 2023. However, the company continued to charge overly high fees even after obtaining that license.
The company additionally failed to register with the New York Attorney General’s office, which it should have done in addition to obtaining the state’s BitLicense.
New York Attorney General Letitia James called Coin Cafe’s actions “another example of why the cryptocurrency industry needs to be better regulated.”
The current announcement also mentioned recently proposed crypto-specific regulation from James that could lead to further enforcement.
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