The cryptocurrency exchange CoinEx has been sued by New York Attorney General Letitia James, who alleges the company falsely presented itself as an exchange by failing to register as a securities and property agent with the state.
In a 38-page petition filed by James with the New York Supreme Court on February 22, CoinEx is alleged to have “engaged in repeated and persistent fraudulent practices” and violated the state’s Martin Act, considered one of the strictest anti-fraud and securities laws in the United States.
He also claimed that CoinEx listed several tokens that qualified as “both goods and securities.”naming Amp (AMP), LBRY Credits (LBC), Rally (RLY) and Terra (LUNA).
When crypto platforms disregard our laws, they put New Yorkers at risk.
We’re looking to stop @coinexcom from operating in New York and will continue to protect people from the dangers of the cryptocurrency industry.
—NY AG James (@NewYorkStateAG) February 22, 2023
When cryptocurrency platforms ignore our laws, they put New Yorkers at risk. We are seeking to stop @coinexcom from operating in New York and will continue to protect people from the dangers of the cryptocurrency industry.
In a February 22 statement, James said that CoinEx is not registered with the Securities and Exchange Commission or the Commodity Futures Trading Commission, “as required by New York law” to sell the tokens.
The Prosecutor’s Office created a CoinEx account with a computer and an Internet address based in New York and claimed that it could operate on the platform.
“The days of cryptocurrency companies like CoinEx acting like the rules don’t apply to them are over,” he added.
The petition also states that CoinEx failed to comply with a December 22 subpoena sent by the Attorney General’s Office to “provide testimony regarding its platform’s virtual asset trading activities.”
“CoinEx was subpoenaed to appear for an examination under oath on January 9, 2023, and failed to appear […] CoinEx’s default is prima facie evidence that CoinEx has incurred the [mencionadas] fraudulent practices.”
In the petition, James is seeking an injunction barring CoinEx from trading as an exchange and barring it from operating in the state by ordering it to geoblock Internet addresses and GPS location data coming from New York.
Cointelegraph has reached out to CoinEx for comment on the situation, but has not received an immediate response.
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