US-based cryptocurrency exchange Coin Cafe will have to refund all of its investor clients who paid hidden custody fees. In recent years, authorities found that the platform has benefited at least BRL 21 million from unjustified charges.
In the lawsuit filed against Coin Cafe, U.S. Attorney Letitia James kicked off the exchange after investor complaints. For example, a client from New York had to pay $10,000 in custody fees.
Another client who left their cryptocurrencies with the brokerage for 13 months paid US$51,000 in fees, which is R$250,000. Because the broker felt insulted that he had not communicated that he charged for custody, the case went to court.
Triggered, the cryptocurrency exchange will now have to pay back $4.3 million to all of its US customers.
Free coffee? Cryptocurrency broker said custody had no fees but was charged
An investigation conducted by New York Attorney General Letitia James found that the company charged investors exorbitant, undisclosed fees for customers to use its wallet storage. However, Coin Cafe listed their wallet storage as “free” on their website.
With that, the American lawyer understood that the broker had defrauded customers who had values with the company. Many of them even had their cryptocurrencies confiscated by the brokerage as custody fees and lost their entire investment.
In a note, lawyer James defended stricter regulation of the cryptocurrency market so that situations like this do not occur again.
“If there are not enough safeguards to protect consumers and investors, businesses can take advantage of New Yorkers. Coin Cafe has scammed hundreds of New Yorkers out of thousands of dollars through deceptive marketing and lack of effective regulation. This is yet another example of why the cryptocurrency industry needs to be better regulated, just like any other financial institution New York investors put their hard-earned money into. Every New Yorker deserves to have confidence that their investments are protected by common sense and royal oversight.”
Cryptocurrency broker will have to refund clients after many left zero balance
OAG’s research found that Coin Cafe initially promised investors a free account and wallet storage at no additional cost. However, the reality was different, as from September 2020, Coin Cafe started charging storage fees for the wallet service, without providing prior information to investors.
Over time, Coin Cafe has changed its fee structure four times, each time increasing the amounts charged to its customers without properly notifying them of the increases.
The most significant change to the fee structure came in October 2022 when Coin Cafe started charging investors up to 7.99% of the account value or $99.00 in Bitcoin per month if an investor made no purchases, sales or transfers on the Coin Cafe website within 30 days.
Such fees represented an alarming percentage, equivalent to 96% of the total value of investor accounts. In addition, the fees were not clearly disclosed on the website and the messages sent to investors did not make it clear that the fees would be high.
Ultimately, Coin Cafe collected storage fees from more than 300 investors in New York City. These practices resulted in hundreds of thousands of dollars worth of Bitcoin being embezzled from investors and led to the complete deletion of hundreds of accounts, leaving investors with no balance.
Broker will have to pay back millions and limit fees, making its policy clear to clients
In October 2022, an OAG researcher opened a Coin Cafe account and made two Bitcoin purchases. In December 2022, Coin Cafe sold the researcher $108.00 worth of Bitcoin in one transaction and later $100.00 worth of Bitcoin in another transaction. In total, the researcher had $208 worth of Bitcoin.
However, in March 2023, Coin Cafe charged the researcher $99.00 in fees without notice even after receiving a BitLicense from DFS, resulting in a $109 remaining balance in his account.
Under the agreement reached, Coin Cafe will be required to repay all fees to U.S. investors who request reimbursement over the course of the next year. Within five days of the agreement’s effective date of May 18, Coin Cafe will contact its US customers via email to inform them of their refund entitlement.
Customers can request a refund in writing, via email, post or via the Coin Cafe website. In addition, Coin Cafe will update the U.S. Attorney on a monthly basis on the progress of these repayments.
According to the agreement Coin Cafe will also be required to limit the amount of fees charged for its wallet service to 0.002% per Bitcoin per monthensuring that all fees are properly disclosed to investors.
Source: Live Coins

Barry Siefert is an accomplished journalist and author at The Nation View. He is known for his expertise in the field of cryptocurrency, and has written extensively on the topic. With a background in finance and economics, Barry has a deep understanding of the underlying technology and market forces that drive the crypto industry.