The New York Attorney General entered into a settlement with BitCoin seller and NYDFS licensee Coin Cafe over allegations of failure to register with the NYAG’s Investor Protection Bureau and charging excessive fees. According to NYAG allegations in its Assurance of Discontinuance:
• Coin Café — apparently only a seller of only Bitcoin – nonetheless failed to register with the NYAG as a commodity broker dealer.
• Coin Café allegedly charged investors high fees and undisclosed fees to use its wallet service, and provided inadequate disclosures, “despite marketing its wallet storage as ‘free’ on its website.”
• Coin Café has agreed to significant remediation and restitution, according to the AOD, including limiting fees and providing fulsome disclosures.
• NYAG initially served its investigative subpoena in January 2023, the same month that NYDFS granted Coin Café a BitLicense.
• NYAG’s press release appears to address certain NYDFS supervisory issues, indicating that this conduct occurred because of “a lack of effective regulation” and highlighting the fact that Coin Café – after falling under the grandfather exception to the BitLicense in 2015 – “was allowed to continue its virtually currency business for seven and [a] half years while DFS reviewed and considered its BitLicense application.”