The cryptocurrency trading platform, Coin Cafe, has been directed to reimburse its users with a total amount of $4.3 million by the New York Attorney General, Letitia James. The action comes in response to an allegation that the platform imposes excessively high and undisclosed fees for storing Bitcoin, resulting in some accounts being completely depleted of their funds.
On Thursday, New York Attorney General Letitia James accused a trading firm based in Brooklyn of deceiving its customers by providing misleading information regarding “exorbitant and undisclosed” fees.
In July 2015, Coin Cafe submitted an application for a virtual currency license to the New York States Department of Financial Services. However, the approval for the New York BitLicense was granted to the trading firm in January 2023, after a considerable duration of time.
By offering free wallet storage on its website, the trading firm managed to attract a significant following. However, the undisclosed fees imposed by Coin Cafe led to numerous investors completely depleting their accounts. In an effort to address the harm caused, the company is now in the process of reimbursing approximately $4.3 million to those affected, with 340 investors from New York among them.
In an official statement, Letitia James, the New York Attorney General (NY AG), emphasized Coin Cafe’s fraudulent activities. “Coin Cafe charged one New Yorker over $10,000 in one month and another investor more than $51,000 in fees over the course of 13 months.”
In addition, NY Attorney General said, “When there are inadequate safeguards to protect consumers and investors, companies are able to take advantage of New Yorkers,”
Citing the example of the Coin Cafe trading firm, the attorney general said the cryptocurrency industry needs to be “better regulated, just like any other financial institution where New York investors put their hard-earned money.”
The firm took advantage of “exorbitant and undisclosed fees “by investors the greater of 7.99 percent of the account or $99 worth of Bitcoin per month if an investor did not buy, sell, or transfer Bitcoin on the Coin Cafe site within 30 days.”
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