The New York Attorney General Letitia James has secured the sum of $4.3 million from Coin Cafe, a Brooklyn-based digital currency service provider. According to the update from the Attorney General’s office, Coin Cafe was exploiting its customers for safeguarding their cryptocurrencies on dedicated accounts kept with the company’s wallet.
Based on the investigation from the Attorney General’s Office, Coin Cafe was charging exorbitant and undisclosed fees to use its wallet storage, despite marketing its wallet storage as “free” on its website.
The regulator said the company’s fees were so high that the charges wiped out some customer’s accounts completely. The regulator said Coin Cafe charged one of its customers as much as $10,000 within a 30-day period while another user was charged about $51,000 within the space of 13 months.
The Attorney General revealed that Coin Cafe has owned up to its flaws and acknowledged it might have increased its fees without properly informing the customers.
Coin Cafe to Pay the Price
The New York Attorney General said Coin Cafe has agreed to pay restitution to all investors who were misled. This restitution will include over $508,000 to more than 340 New York investors who were charged fees without their knowledge.
“Coin Cafe defrauded hundreds of New Yorkers out of thousands of dollars with its deceptive marketing and due to a lack of effective regulation. This is yet another example of why the cryptocurrency industry needs to be better regulated, just like any other financial institution where New York investors put their hard-earned money. Every New Yorker deserves to be confident that their investments are protected with commonsense regulations and real oversight,” said Attorney Letitia James.
The New York Attorney General’s Office is known for its tough stance against unwholesome practices in the digital currency ecosystem. Over the past few years, a number of related enforcement actions and settlements have been brokered with popular crypto companies, one of whom was with USDT issuer, Tether Holdings Limited.
The regulator has advised all New York residents to report all fraudulent activities to its office, a move they can do anonymously.
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