New York Attorney General, Letitia James, made an important announcement on Thursday regarding resolving a case involving Coin Cafe, a trading platform.
The Attorney General’s office had successfully obtained $4.3 million from Coin Cafe, which had deceived investors by falsely offering free Bitcoin storage on company-hosted wallets.
Instead of fulfilling their promise, the platform stealthily imposed exorbitant user fees. According to the statement, Coin Cafe has officially admitted to the deceptive practice of regularly implementing and escalating fees without providing adequate disclosure to investors.
The trading platform had charged one customer over $10,000 in fees within a month and another investor an astonishing amount of over $51,000.
Attorney General James emphasized the necessity for improved regulation within the cryptocurrency industry, comparing it to the scrutiny of any traditional financial institution.
Attorney General James added:
Every New Yorker deserves to be confident that their investments are protected with commonsense regulations and real oversight.
Coin Cafe, a cryptocurrency trading platform based in Brooklyn, neglected to comply with the legal obligation of registering with the New York Office of the Attorney General (OAG) as a commodity broker-dealer.
Coin Cafe Agrees To Compensate About 340 Deceived Investors
According to the New York Attorney General, Coin Cafe has agreed to pay rebates to investors conned by their practices. The refund package amounted to over $508,000 and will be issued to more than 340 New York investors unknowingly charged fees by the trading platform.
According to the regulator, the exorbitant fees imposed by the company were of such magnitude that they entirely depleted the accounts of certain customers. Coin Cafe had silently started initiating storage fees for its wallet service in September 2020, withholding this information from investors.
Over time, the company modified its fee structure four times, with each adjustment resulting in higher customer charges. Remarkably, Coin Cafe either failed to communicate these fee increases or remained ambiguous to its investors about the same.
The most significant alteration to the fee structure occurred in October 2022. The platform has now agreed to address the financial harm caused by its actions.
Renowned for its firm approach to combating illicit activities within the digital currency ecosystem, the New York Attorney General’s Office has established a notable track record. In recent years, the office has undertaken various enforcement actions and reached settlements with prominent cryptocurrency companies.
Among these cases was the investigation and settlement with Tether Holdings Limited, the issuer of the widely-used stablecoin USDT. The New York Attorney General’s Office claims that it wants to ensure that companies comply with regulatory standards and protect the interests of investors and consumers.
Featured Image From CNBC, Charts From TradingView.com