Coin Cafe to repay $4.3M in charges that ‘worn out’ traders’ Bitcoin accounts
Cryptocurrency buying and selling platform Coin Cafe has been ordered to repay $4.3 million to its customers after allegedly charging “exorbitant and undisclosed charges” for storing Bitcoin on the platform — leading to some accounts being drained entirely of its funds.
Based in Brooklyn, Coin Cafe initially filed an application for a virtual currency license with the New York State Department of Financial Services in July 2015, however, was only approved in January this year.
Despite the seven-and-a-half-year application process, it was allowed to operate throughout but was flagged as putting “investors at risk,” as it didn’t uphold its obligation to register with the Office of the Attorney General for New York – which all New York broker-dealers are required to do so.
On May 18, it was revealed that the trade had been charging traders “exorbitant” fees for investors to store Bitcoin without properly informing them, leading to some cases in which investors’ accounts were wiped out entirely, according to New York State Attorney General Letitia James.
In a statement, James said Coin Cafe defrauded “hundreds of New Yorkers” out of hundreds of {dollars}, routinely charging and growing “fees without properly informing investors.”
One New York investor incurred charges exceeding $10,000 in a single month, whereas one other investor was hit with charges amounting to $51,000 over a span of 13 months. It was famous:
“The company was charging investors exorbitant and undisclosed fees to use its wallet storage, despite marketing its wallet storage as “free” on its web site.”
The Workplace of the Lawyer Normal’s (OAG) investigation revealed that Coin Cafe modified the price construction 4 occasions since September 2020, with out ever “clearly telling investors of the increase.”
The “most drastic fee structure change” occurred in October 2022 when traders had been charged a price for inactivity. It acknowledged:
“It charged 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.”
James criticized the “deceptive marketing” concerned, but additionally highlighted the “lack of effective regulation” as a contributing issue.
“This is yet another example of why the cryptocurrency industry needs to be better regulated,” James acknowledged.
Associated: US lawmakers maintain EU and UK as examples of crypto regulation in joint listening to
In a settlement, Coin Cafe is required to refund all charges to U.S.-based traders who request a refund inside the subsequent 12 months.
The platform can also be obligated to inform all U.S-based clients of their eligibility for a refund by way of e mail by Might 23.
Cointelegraph reached out to Coin Cafe for remark however didn’t obtain a response by the point of publication.
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