On February 22, New York Attorney General Letitia James filed an enforcement action against digital asset exchange, CoinEx, for failing to register as a securities and commodities broker-dealer and for falsely representing itself as a crypto exchange without appropriate registration in violation of New York law. In the petition, filed in the New York County Supreme Court, Attorney General James alleged that her office was able to buy and sell cryptocurrencies on CoinEx in New York, although the company is unregistered in the state, which is a violation of New York’s Martin Act. The lawsuit seeks to permanently enjoin CoinEx from operating in New York through its website and mobile apps.
CoinEx is a digital asset trading platform that allows investors to buy and sell cryptocurrency. CoinEx investors can buy and sell virtual currencies, such as AMP, LUNA, LBC, and $RLY, each of which the NY AG has alleged constitute securities and commodities. New York law requires securities and commodities brokers to register with the state. In addition, CoinEx claimed to be an exchange, but is not registered with the Securities and Exchange Commission (SEC) as a national securities exchange or appropriately designated by the Commodity Futures Trading Commission (CFTC) as is required under New York law. CoinEx also failed to comply with a subpoena issued by the NY AG’s office to provide more information about its digital asset trading activities in the state.
This latest action continues a movement of increasing scrutiny by the NY AG in the digital asset space. In a statement released in connection with the filing, Attorney General James urged New Yorkers who have been affected by deceptive conduct in the digital asset market to report those issues to her office. The statement also encourages workers in the digital asset industry who may have witnessed misconduct or fraud to file an anonymous whistleblower complaint.