After thousands of dollars in fees, investors will receive a total of $508,000.
The New York Attorney General’s office said May 18 that it successfully took action against crypto firm Coin Cafe, which handed over $4.3 million after the agency found that it charged wallet users extremely high fees.
The agency said Coin Cafe advertised its wallet service as free and did not adequately inform users of its actual fee structure.
Overcharging users
The company reportedly charged New York residents tens of thousands of dollars in fees and completely drained some user account balances.
Coin Cafe changed its fee structure four times and introduced a particularly uncompensated fee increase in October 2022. At that time, it began charging users the higher of 7.99% or $99 per month if they did not make a cryptocurrency transaction within 30 days.
Coin Cafe will now pay restitution to investors, including $508,000 to 340 individuals in New York State. The company will be allowed to continue operating, but must limit monthly fees to 0.002% and must fully inform users of all fees.
New York has strict regulations
Unlike some of the other companies targeted by the New York Attorney General, Coin Cafe successfully obtained a BitLicense from the state in 2023. However, the company continued to charge exorbitant fees even after receiving the license.
The company has not yet registered with the New York Attorney General’s office, which it should have done in addition to obtaining the state’s BitLicense.
New York Attorney General Letitia James called Coin Cafe’s actions “another example of why the cryptocurrency industry needs better regulation.”
The current announcement also references crypto-specific regulations recently proposed by James that could lead to further enforcement.