Coin Cafe Paying $4.3 Million To Investors For Fee Scam
Crypto trading platform Coin Cafe is found to defraud investors by charging excessive fees without informing the investors. The office of the Attorney General ordered Coin Cafe to refund $4.3 million that was obtained illegally.
Brooklyn-based crypto trading platform Coin Cafe did not disclose properly how much they charge for their services. They provide storage service which is advertised as free. It attracts people's attention. But what they were doing behind the scene was unknown.
When you see ads for giving services for free, be careful about that. There might be some conditions that are written in small letters. Or, they do not disclose details. You accept the offer and think you save some money going for free services. You end up paying more or losing more money in some tricky ways.
Coin Cafe applied for a virtual currency license before. The New York State Department of Financial Services approved the license for their business in January 2023. Even though they claim to offer free storage service, they charged fees for storing crypto from September 2020.
It is absolutely okay when investors are aware of what is going on. Without notifying investors, charging high fees from investors is not acceptable. Not only that, Coin Cafe changed and modified its fee structure four times without disclosing anything to the investors.
They did not stop there. According to one of the latest fee structures, they started charging an inactivity fee. If investors do not trade on their platform in a month, they charge 7.99% of the account balance or $99 worth of Bitcoin each month. With this magical fee, they successfully drain investors' accounts.
Finally, Coin Cafe was caught doing this shady thing and ordered to repay $4.3 million to all affected investors. The point to be noted is, if you invest in cryptocurrency, you should not trust any third party for ensuring security and storing your cryptocurrency.
You can trade cryptocurrency to make a profit. Your trading balance should be on the trading platform. In case you invest in crypto, you should transfer your crypto and hold that in your wallet. You are capable of holding your private key, otherwise, think twice before investing in cryptocurrency.
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Reference: 1.
About Me
Hi, I am Rezoanul Vibes. I'm a content creator and passionate learner. I write about finance, cryptocurrency, and lifestyle.
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It sucks to see these companies show up but I am always skeptical about free. The business is there to make a profit and they have to do that somehow. Whether it is by selling your data or charging you fees. No fees means it's unsustainable and I would want to know how they are staying in business.
I am also skeptical about free service. Those companies do not have good intentions in the first place. Otherwise, they would not do something like this.
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