The New York Attorney General's office has uncovered that the cryptocurrency trading platform Coin Cafe engaged in the charging of "exorbitant and undisclosed fees" to investors. Disturbingly, one user was charged a staggering amount of $51,000 within a mere 13-month period, while another investor's account was completely drained of funds.
As a result, Coin Cafe has been ordered to reimburse its users a total of $4.3 million to compensate for the alleged unauthorized fees associated with storing Bitcoin on their platform. Initially located in Brooklyn, Coin Cafe had submitted an application for a virtual currency license with the New York State Department of Financial Services back in July 2015. However, despite the application process spanning over seven and a half years, the platform was only granted approval in January of this year.
During this extended period, Coin Cafe was permitted to continue its operations, despite being flagged as a risk to investors due to its failure to fulfill the obligation of registering with the Office of the Attorney General for New York. Such registration is mandatory for all broker-dealers in New York.
New York State Attorney General Letitia James disclosed on May 18 that the exchange platform had been imposing "exorbitant" fees on users without providing proper notification. Consequently, some investors found their accounts completely depleted as a result of these undisclosed fees.
In a statement, Attorney General James expressed that Coin Cafe had defrauded "hundreds of New Yorkers" out of substantial sums of money by consistently imposing and increasing fees without adequately informing the investors.
Specific examples of the excessive fees incurred by investors were revealed, including one New York investor who accrued fees exceeding $10,000 within a single month. Additionally, another investor experienced fees amounting to $51,000 over a duration of 13 months. Such actions were deemed highly concerning and in violation of established regulations.
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