- Bitcoin custody company Coin Cafe has been found to have defrauded customers to the tune of $4.3 million
- The company surreptitiously levied fees while claiming its services were free
- One customer was charged $10,000 in one month
New York-based crypto platform Coin Cafe will have to pay back $4.3 million to customers it was found to have defrauded, according to the New York Attorney General. Coin Cafe, which acquired a New York Bitlicense just four months ago, allowed customers to securely store their bitcoin with the platform, but an investigation by the Office of the Attorney General (OAG) found that it had been imposing excessive and undisclosed fees on customers for utilizing its services, despite promoting the wallet storage as free on its website.
Seven and a Half Year Wait for Bitlicense
Coin Cafe launched in 2013 and applied for a Bitlicense in 2015. It was allowed to continue offering its services while its application was assessed, which took a staggering seven and a half years. It was finally awarded its license in January this year, only to find itself at the heart of an OAG investigation, which found that Coin Cafe’s “exorbitant fees” ultimately resulted in “the complete depletion of customers’ accounts.”
During the investigation, it was revealed that Coin Cafe charged one customer a staggering $10,000 in fees in a single month, while another was subjected to fees totaling more than $51,000 over a span of 13 months, all while claiming that the platform was free to use. The OAG’s findings clearly demonstrated that Coin Cafe routinely imposed and raised fees without adequately informing customers about the changes.
Coin Cafe settled with the OAG for $4.3 million which will go back to the defrauded customers while agreeing to make its fee schedule publicly available. The company also agreed to limit the fees it charges for its wallet service to 0.002 percent per bitcoin per month.