The New York State Attorney General’s office reportedly filed a lawsuit against CoinEx, a Hong Kong-based cryptocurrency exchange, on Wednesday, accusing the exchange of engaging in fraudulent practices and operating as an unregistered securities broker and commodity broker-dealer under state law.
According to the complaint filed with a New York state court in Manhattan, CoinEx did not register as an exchange with the U.S. Securities and Exchange Commission (SEC), as a commodities broker-dealer with the Commodity Futures Trading Commission, or with New York regulators prior to offering services in the state.
Despite this, the company advertised itself as an exchange on its website and offered services similar to those that national securities exchanges or other similar platforms may offer.
The petition alleged that CoinEx listed various tokens and services that qualify as securities and/or commodities under state law, noting New York’s Martin Act and General Business Law.
“The Tokens each fall within the Martin Act’s definition of commodities, which includes any foreign currency and any other good, article, or material,” the filing said.
Senior Detective Brian Metz said in an affidavit that he was able to purchase and sell several tokens, including Flexa’s AMP, LBRY’s LBC, Terraform Labs’ LUNA, and Rally’s RLY tokens, using ether (ETH) in October through CoinEx’s website.
The NYAG’s office is seeking a geofence of New York by blocking local IP addresses, a cease and desist order preventing CoinEx from doing any business in New York, full monetary restitution and disgorgement from its business in New York, and payment of NYAG fees.
The case also seeks to establish a precedent for how other cryptocurrency exchanges conduct their business in New York and potentially other states in the US. CoinEx has refused to comply with a subpoena, the filing also said.
