Last Updated on May 20, 2023 by Bitfinsider
Coin Cafe has been ordered to reimburse $4.3 million to its users after reportedly charging “exorbitant and undisclosed fees” for keeping Bitcoin on the platform, resulting in some accounts being drained completely of cash.
Coin Cafe, based in Brooklyn, first applied for a virtual currency license with the New York State Department of Financial Services in July 2015; however, it was only granted in January of this year.
Despite the seven-and-a-half-year application process, Coin Cafe was allowed to continue operating but was flagged as putting “investors at risk” because it failed to register with the Office of the Attorney General for New York, as all New York broker-dealers are required to do.
According to New York State Attorney General Letitia James, it was revealed on May 18 that the exchange had been collecting “exorbitant” fees for keeping Bitcoin without properly telling investors, resulting in certain situations where investors’ accounts were wiped out totally.
Coin Cafe scammed “hundreds of New Yorkers” out of thousands of dollars, according to James, by consistently charging and raising “fees without properly informing investors.”
One New York investor paid more than $10,000 in fees in a single month, while another paid $51,000 in fees over the course of 13 months.
A settlement requires Coin Cafe to repay all fees to US-based investors who request a refund within the next year.
The platform is also required to notify all US-based clients of their refund eligibility via email by May 23.
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