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

The attorney general’s office has ordered Brooklyn-based cryptocurrency company Coin Cafe to return more than $4 million to cryptocurrency investors.

The refund comes after investigations revealed that the company charged users exorbitant fees without their consent.

Free, but not free

in press release On May 18, the New York Attorney General’s office claimed that Coin Cafe charged investors high fees for storing bitcoins in the company’s wallet, despite the service being advertised as “free” on their website.

Coin Cafe, which recently received approval for a virtual currency license from the New York State Department of Financial Services (DFS) in January 2023, also known as BitLicense, claimed to offer free storage services to investors but began charging for crypto storage in September 2020 without notification. clients.

Based on investigations, the company has increased fees four different times, each one higher than the previous fee. In October 2020, Coin Cafe implemented what the press release described as its “tighter fee structure,” with the platform charging users $99 in bitcoin per month if they did not trade or transfer BTC on its site within one month.

Also, a New York client paid $10,000 in fees in one month, while the cryptocurrency trading firm charged investors more, amounting to $51,000 over the course of 13 months.

Later, the Coin Cafe’s exorbitant fees left investors’ accounts with nothing. According to a statement from the press release:

In the end, Coin Cafe secured storage fees from more than 300 investors in New York. Coin Cafe took hundreds of thousands of dollars in Bitcoin from its investors and completely wiped out hundreds of investor accounts to zero balance.”

Coin Cafe to reduce wallet storage service to 0.002% per BTC

Meanwhile, Coin Cafe has entered into an agreement with the New York Attorney General’s Office to recover the fraudulent investors’ money. Part of the agreement will see the company pay back $4.3 million to all affected investors, which includes $508,000 to more than 340 users in New York.

Coin Cafe will also limit its wallet service fee to 0.002 percent per Bitcoin per month, with the company also being transparent about its fees to investors. In addition, the crypto company will provide monthly updates to the Attorney General’s Office on the status of refunds.

According to a statement from New York Attorney General Letitia James,

“Coin Cafe defrauded hundreds of New Yorkers out of thousands of dollars through its deceptive marketing and due to the lack of effective regulation. This is another example of why the cryptocurrency industry needs better regulation, just like any other financial institution where New York investors put their hard-earned money.” It’s hard for her.”

Also, James’ office claimed that Coin Cafe did not register as a commodity dealer and broker with the New York Attorney General’s office, as required by state law.