Coin Cafe ordered to repay $4.3M in fees that ‘wiped out’ investors’ Bitcoin accounts
Cryptocurrency trading platform Coin Cafe has been ordered to repay $4.3 million to its users after allegedly charging “exorbitant and undisclosed fees" 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, it was only approved in January this year.
Despite the seven-and-a-half-year application process, Coin Cafe 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 exchange had been charging “exorbitant” fees for storing Bitcoin without properly informing investors, 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 tCoin Cafe defrauded “hundreds of New Yorkers” out of thousands of dollars, routinely charging and increasing “fees without properly informing investors.”
One New York investor incurred fees exceeding $10,000 in a single month, while another investor was hit with fees amounting to $51,000 over a span of 13 months. It was noted:
The Office of the Attorney General’s investigation revealed that Coin Cafe changed the fee structure four times since September 2020, without ever “clearly telling investors of the increase.”
This is another example of why my office proposed commonsense measures to regulate the cryptocurrency industry and protect people from
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