Cryptocurrency platform CoinEx sued by New York for offering “security” tokens

ambcrypto.com:

The New York State Attorney General’s office filed a lawsuit against CoinEx yesterday (22 February), claiming that it is an unregistered securities broker and commodity broker-dealer under state law.

According to the complaint, CoinEx did not register as an exchange with the Securities and Exchange Commission (SEC), as a commodities broker-dealer with the Commodity Futures Trading Commission (CFTC), or with New York regulators before offering services in the state.

But the company kept stating on its website that it was an exchange and provided services similar to those provided by national securities exchanges or other similar platforms.

Citing New York’s Martin Act and General Business Law, the petition alleges that the exchange listed several tokens and services that qualify as securities and/or commodities under state law.

All of the tokens can be defined as commodities as per the Martin Act which includes any foreign currency as well as any other good, article, or material.

CoinEx sells and offers to sell commodities in New York through accounts, agreements, or contracts to accounts, mainly for investment purposes.

Under the Martin Act, the tokens are also securities because they represent monetary investments in common enterprises that will generate profits mainly through the efforts of others.

The filing also claims that under state law, Flexa’s AMP, LBRY’s LBC, Terraform Labs’ LUNA, and Rally’s RLY tokens are both securities and commodities.

In an affidavit, New York Senior Detective Brian Metz stated that he was able to buy and sell these tokens using Ethereum (ETH) tokens in October last year over the CoinEx website.

According to the filing, CoinEx also refused to comply with a subpoena. The office of the NYAG wants the