Coin Cafe, a crypto firm based in Brooklyn, has been ordered by the New York Attorney General’s office to refund over $4 million to cryptocurrency investors due to exorbitant fees charged without their consent.
Deceptive “Free” Service
According to a press release on May 18, Coin Cafe advertised on its website that it provided free storage services for investors but later started charging high fees to store bitcoin with the company’s wallet. Investigations showed that the additional fees charged were not communicated to customers.
The company increased the fees four times and charged users $99 in bitcoin monthly if they did not trade or transfer BTC on their site within a month. Coin Cafe also charged more investor fees of up to $51,000 over 13 months, with one New York customer paying $10,000 in fees in a month.
As a result, Coin Cafe lost its customers’ trust and left their accounts with zero balance after charging more than 300 New York investors. The firm was charged with fraudulent and deceptive marketing practices in its operations.
Coins Cafe Agrees to Refund Investors
Coin Cafe and the New York Attorney General’s office have reached an agreement to refund defrauded investors and limit fees for its wallet service to 0.002% per Bitcoin monthly. The company will also be transparent about its fees to investors and provide monthly updates to the Office of the Attorney General regarding the status of refunds.
The agreement includes the payment of $4.3 million to all affected investors, including $508,000 to over 340 New York users. The New York Attorney General Letitia James stated that this case highlights the need for better regulation in the cryptocurrency industry.
Coin Cafe did not register with the New York Attorney General’s office as a commodity dealer-broker as required by state law.