Coin Cafe to Pay $4.3 Million Restitution to Defrauded Investors: NYAG

Brooklyn-based crypto agency Coin Cafe has been ordered by the workplace of the Legal professional Common to refund over $4 million to cryptocurrency traders.

The restitution comes after investigations revealed that the corporate charged customers exorbitant charges with out their consent.

“Free” however not Free

In a press release on Could 18, the New York Legal professional Common’s workplace claimed that Coin Cafe charged traders excessive charges to retailer bitcoin with the corporate’s pockets, regardless of promoting the service as “free” on their web site.

Coin Cafe, which just lately acquired approval for a digital forex license from the New York State Division of Monetary Providers (DFS) in January 2023, also called BitLicense, claimed to supply free storage providers for traders however began charging charges for crypto storage in September 2020 with out informing prospects.

Based mostly on investigations, the corporate elevated the price 4 completely different instances, each larger than the earlier cost. In October 2020, Coin Cafe carried out what the press launch described because the “most drastic price construction,” the place the platform charged customers $99 in bitcoin month-to-month if they didn’t commerce or switch BTC on its website inside one month.

Additionally, one New York buyer paid $10,000 in charges in a single month, whereas the crypto buying and selling firm charged extra investor charges of as much as $51,000 over 13 months.

Subsequently, Coin Cafe’s exorbitant costs left traders’ accounts with nothing. Based on an announcement from the press launch:

“Finally, Coin Cafe took storage charges from greater than 300 New York traders. Coin Cafe took tons of of 1000’s of {dollars} price of Bitcoin from its traders and utterly worn out tons of of investor accounts all the way down to a zero stability.”

Coin Cafe to Scale back Pockets Storage Service to 0.002% per BTC

In the meantime, Coin Cafe entered an settlement with the New York Legal professional Common’s workplace to refund defrauded traders. A part of the settlement will see the agency pay again $4.3 million to all affected traders, which incorporates $508,000 to over 340 New York customers.

Coin Cafe may also restrict charges for its pockets service to 0.002 % per Bitcoin month-to-month, with the corporate additionally being clear about its charges to traders. As well as, the crypto agency will present month-to-month updates to the Workplace of the Legal professional Common in regards to the standing of the refunds.

Based on an announcement from the New York Legal professional Common Letitia James,

“Coin Cafe defrauded tons of of New Yorkers out of 1000’s of {dollars} with its misleading advertising and marketing and on account of an absence of efficient regulation. That is yet one more instance of why the cryptocurrency business must be higher regulated, identical to some other monetary establishment the place New York traders put their hard-earned cash.”

Additionally, James’ workplace claimed that Coin Cafe didn’t register as a commodity dealer-broker with the New York Legal professional Common’s workplace, as required by the state’s legislation.