The cryptocurrency exchange has agreed to settle New York state Attorney General Letitia James' lawsuit.

James had sued CoinEx in February, saying its failure to register before buying and selling tokens such as AMP, LBRY, LUNA and Rally violated the Martin Act, a powerful state law used to fight financial fraud.

The payment includes $1.17 million of refunds to 4,691 investors, which may be reduced if they withdraw crypto assets during a specified 90-day period, plus a $626,000 fine.

A proposed settlement was filed on Wednesday in a New York state court in Manhattan.

The lawsuit calls for CoinEx to be banned from offering, selling or buying securities and commodities in New York, or making its platform available in the state.

The cryptocurrency exchange did not admit wrongdoing in agreeing to settle the lawsuit.

“Unregistered crypto platforms pose a risk to investors, consumers, and the broader economy," James said in a statement. “Today's agreement should serve as a warning to crypto companies that there are hefty consequences for ignoring New York's laws."

The case was part of her enforcement efforts to rein in what she has called “shadowy" crypto companies.

The Hong Kong-based CoinEx was founded in 2017 and is also known as Vino Global Ltd.

This month the SEC sued Binance, the largest crypto platform, and Coinbase, the largest U.S. crypto platform, saying they operated as exchanges without registering with the agency.

(With inputs from Reuters)

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Updated: 15 Jun 2023, 11:52 PM IST