The New York State Attorney General's office filed suit against crypto exchange CoinEx on Wednesday, arguing it is an unregistered securities broker and commodity broker-dealer under state law.
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, the complaint said. Despite this, the company said it was 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. "CoinEx is engaged in the business of selling and offering to sell commodities through accounts, agreements, or contracts to accounts in New York primarily for investment purposes. The Tokens are also securities under the Martin Act because they represent investments of money in common enterprises with profits to be derived primarily from the efforts of others."
CoinEx also refused to comply with a subpoena, the filing claimed. The NYAG's office is looking for CoinEx to geofence New York by blocking local IP addresses, cease doing any business in New York, provide "full monetary restitution" and disgorgement from its business in New York and pay NYAG fees.
The filing also alleges that Flexa's AMP, LBRY's LBC, Terraform Labs' LUNA and Rally's RLY tokens are both securities and commodities under state law. New York Senior Detective Brian Metz said in an affidavit that he was able to purchase and sell these tokens using ether (ETH) in October through CoinEx's website.
CoinEx also refused to comply with a subpoena, the filing claimed. The NYAG's office is looking for CoinEx to geofence New York by blocking local IP addresses, cease doing any business in New York, provide "full monetary restitution" and disgorgement from its business in New York and pay NYAG fees.
CoinDesk
