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On Wednesday, February 22nd, New York Attorney General Letitia James filed a petition against the cryptocurrency exchange CoinEX seeking to prevent it from operating in the state. According to the announcement, CoinEX violated the Martin Act by failing to register with the state and failing to comply with a subpoena issued by the Office of the Attorney General (OAG).
New York Moves to Ban CoinEX From Operating in the State
According to the Wednesday release, the NY Attorney General is seeking to prevent the cryptocurrency exchange CoinEx from operating in the state. The OAG states their agents were able to use the platform to trade cryptocurrencies despite the fact that the company is not registered to operate in New York.
The announcement describes Terraform Labs’ LUNA, LBRY’s LBC, Flexa’s AMP, and Rally’s RLY as securities and commodities offered by CoinEX and explains that their offering constitutes a violation of the state’s Martin Act. Furthermore, the OAG alleges that CoinEx misled investors by claiming to be an exchange without previously registering with the SEC and the CFTC.
Finally, the release states that CoinEx failed to comply with a subpoena issued by the OAG requesting additional information about the company’s operations in the state. Attorney General James is seeking to block New York-based IP addresses from accessing CoinEx’s platform. Furthermore, she is requesting the company be blocked from operating in the state and prevented from falsely representing itself as an exchange.
New York Regulators Increasingly Set Their Sights on Crypto
In recent months, New York state regulators have been increasing their efforts against various cryptocurrency companies. The office of Attorney James joined seven other states in an enforcement action against the cryptocurrency lender Nexo. Subsequently, Nexo announced it would be exiting the United States due to increased regulatory pressure.
More recently, the New York Attorney General called on Congress to ban Bitcoin from being included in retirement plans. A similar action has been taken by an Elizabeth Warren-led group of lawmakers which called on Fidelity to discontinue its BTC 401(k) offering on three occasions throughout 2022.
On February 13th, the stablecoin issuer Paxos was ordered to stop minting its Binance-branded BUSD by the New York Department of Financial Services. Paxos also found itself a target of an SEC enforcement action alleging that BUSD constitutes an unregistered securities offering.
Do you think other state regulators will take a more active role in cryptocurrency regulation in 2023? Let us know in the comments below.