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Financial Services Law Insights and Observations

New York enters judgment against crypto platform and CEO

State Issues Digital Assets State Attorney General New York Cryptocurrency Enforcement

State Issues

On September 13, the New York attorney general announced a judgment against an unregistered virtual currency trading platform and its CEO (collectively, “defendants”) for allegedly defrauding thousands of investors across the country out of millions of dollars by converting investor funds without their consent. According to the AG, in June, the New York Supreme Court granted the AG’s motion for a preliminary injunction and the appointment of a temporary, court-appointed receiver with special powers to safeguard investments already made on the trading platform. The defendants failed to comply with the preliminary injunction by creating, offering, and selling a new virtual currency and failed to respond to the AG’s complaint. The judgment permanently appoints the court receiver to obtain, safeguard, and return all assets invested and traded through the trading platform and imposes a money judgment against the defendants of $3,061,511, both together and separately. In addition, the judgment requires the defendants to permanently cease their illegal and fraudulent operations and puts in place a permanent receiver to protect investors’ funds.

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