Coin Cafe ordered to repay $4.3 million in fees that wiped out investors’ Bitcoin accounts

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Cryptocurrency trading platform Coin Cafe has been ordered to refund $4.3 million to its users after allegedly charging exorbitant and undisclosed fees “for storing Bitcoin on the platform, which led to the complete draining of certain accounts of its funds.

Brooklyn-based Coin Cafe originally applied for a virtual currency license with the New York State Department of Financial Services in July 2015; however, it was only approved in January of this year.

Despite the seven-and-a-half-year application process, Coin Cafe was allowed to operate throughout, but was flagged as putting investors at risk because it failed to comply with its obligation to register with the office of the Attorney General of New York, which all New York brokers are required to do.

On May 18, it was revealed that the exchange was charging exorbitant fees for storing Bitcoin without properly informing investors, leading to some cases in which investors’ accounts were wiped entirely, according to the Attorney General of the United States. ‘State of New York, Letitia James.

In a statement, James said tCoin Cafe defrauded hundreds of New Yorkers out of thousands of dollars, charging and regularly increasing fees without properly informing investors.

One New York investor incurred fees exceeding $10,000 in a single month, while another investor was hit with fees amounting to $51,000 over a 13-month period. It was noted:

The company was charging exorbitant, undisclosed fees to investors to use its wallet storage, despite marketing its wallet storage as free on its website.

The Attorney General’s Office investigation found that Coin Cafe had changed the fee structure four times since September 2020, without ever clearly informing investors of the increase.

The most drastic fee structure change occurred in October 2022, when investors had to pay an inactivity fee. He stated:

It charged investors the higher of 7.99% of the account or $99 worth of Bitcoin per month if an investor did not buy, sell or transfer Bitcoin on the Coin Cafe site within 30 days.

James criticized the misleading marketing involved, but also pointed to the lack of effective regulation as a contributing factor.

This is yet another example of why the cryptocurrency industry needs to be better regulated, James said.

Related: US Lawmakers Consider EU, UK Examples of Crypto Regulation in Joint Hearing

In a settlement, Coin Cafe is required to refund all fees to US-based investors who request a refund within the next year.

The platform is also required to notify all US-based customers of their eligibility for a refund via email by May 23.

Cointelegraph has contacted Coin Cafe for comment but has not received a response at the time of publication.

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