CoinEx Token

CoinEx, a cryptocurrency exchange headquartered in Hong Kong, has faced persistent regulatory challenges due to non-compliance with registration and anti-money laundering (AML) requirements. Despite its regional prominence, the platform has been implicated in facilitating unregulated securities trading and has suffered significant security breaches, exacerbating risks to investors. These issues reflect broader systemic weaknesses in crypto exchange governance and highlight the intensified scrutiny by authorities globally, including Hong Kong, striving to enforce stricter financial oversight in a rapidly evolving digital asset landscape. CoinEx’s trajectory underscores the critical need for comprehensive regulation to safeguard market integrity and user protection.

CoinEx Token and the CoinEx cryptocurrency exchange, headquartered in Hong Kong, have faced significant regulatory scrutiny due to failures in registration and compliance related to trading activities in jurisdictions such as New York, USA. While not publicly charged explicitly for money laundering in Hong Kong, the platform’s deficient AML controls and reported large-scale security breaches underscore its vulnerability to illicit use, including money laundering. Regulatory actions have compelled CoinEx to impose geoblocking, refund investors, and reinforce AML protocols, reflecting cross-border regulatory efforts to curb illegal crypto transactions involving the token. The case exemplifies ongoing challenges in aligning crypto exchange operations with evolving global financial crime prevention standards, particularly in a jurisdictionally complex environment like Hong Kong.

Countries Involved

The case involves multiple jurisdictions prominently Hong Kong, where CoinEx is based, and the United States, particularly New York state due to significant enforcement action. The platform’s global reach means it has users and transactions internationally, with specific regulatory conflicts arising in the US and potential concerns extending to other jurisdictions monitoring crypto compliance, including Hong Kong’s financial regulators. This multi-jurisdictional aspect complicates oversight and enforcement, as CoinEx serviced users from countries where registration and licensing regulations were not met.

Date Discovered / Reported

The most significant enforcement and regulatory discovery occurred in early 2023, notably with the New York Attorney General filing suit against CoinEx in February 2023. This culminated in a settlement in mid-2023, with further operational adjustments through 2023 and 2024, including more recent events like a security breach reported in September 2023. These dates mark milestones in the unfolding of public regulatory scrutiny and CoinEx’s responses.

Cryptocurrency Involved

CoinEx Token (CET) as native utility token, alongside major cryptocurrencies BTC, ETH, USDT, XRP, SOL, Kadena used in laundering and trading operations

Type of Crime

The primary crime allegations revolve around regulatory non-compliance, specifically operating as an unregistered securities and commodities broker-dealer in jurisdictions like New York. While explicit money laundering prosecutions have not been publicly detailed by Hong Kong authorities, the platform’s failure to meet AML/KYC (Anti-Money Laundering / Know Your Customer) standards as required by law facilitates potential laundering activities. Additionally, a major security breach involving theft of approximately $43 million in cryptocurrencies poses risks of those funds being laundered through anonymous blockchain addresses.

Entities Involved

CoinEx Global Limited is the main cryptocurrency exchange entity headquartered in Hong Kong. Enforcement entities include the New York Attorney General’s office, US Securities and Exchange Commission (SEC), and Commodity Futures Trading Commission (CFTC) in the US. In Hong Kong, the Securities and Futures Commission (SFC) and financial regulatory bodies oversee AML compliance and have implemented codes of conduct which CoinEx has pledged to abide by following resumption of local operations post-2021 crackdown.

PEP Involvement

Publicly available reports do not specify direct involvement of Politically Exposed Persons (PEPs) in the CoinEx Token money laundering or regulatory cases. The focus of regulatory attention remains on the exchange’s corporate compliance and operational legality rather than individual PEP-linked transactions. However, due to the anonymous or pseudonymous nature of blockchain, monitoring for PEP links continuously remains essential in AML compliance frameworks.

Laundering Techniques Used

Though specific laundering techniques tied directly to CoinEx Token are not documented publicly, typical methods likely facilitated by lax controls on the exchange include laundering through peer-to-peer (P2P) trades, mixing services, layering transactions across multiple cryptocurrencies, and exploiting anonymized wallets to obfuscate transaction trails. The platform’s prior unrestricted access for unregistered users and failure to implement robust geoblocking or KYC measures in some jurisdictions raised significant risks for misuse in layering and integration phases of money laundering.

Estimated Value Laundered

Precise estimates of laundered value involving CoinEx Token in Hong Kong are not publicly available. The breach of around $43 million in stolen cryptocurrencies in 2023 underscores the scale of funds potentially funneled illicitly. The New York settlement involved $1.7 million in refunds and penalties relating to unregistered operations, which while regulatory in nature, highlights the sums users transacted through the platform. Overall, the unavailability of concrete laundering value estimates suggests gaps remain in forensic and regulatory transparency.

Transaction Analysis Summary

Investigations show that CoinEx allowed trading by users in restricted jurisdictions such as New York without proper registration. Transactions involved numerous digital tokens classified as securities and commodities, conducted on the platform with fees levied. Blockchain forensic firms identified suspicious wallet addresses linked to hacking and potential illicit outflows. These wallet addresses moved stolen tokens, including ETH and XRP, across multiple chains, reflecting typical laundering behavior aimed at obfuscating sources and destinations.

Regulatory/Enforcement Actions Taken

The New York Attorney General sued CoinEx in February 2023 for violations of the Martin Act due to failure to register as required, leading to a $1.7 million settlement and a prohibition on servicing New York residents. CoinEx also committed to implementing geoblocking measures and restricting US customer accounts to withdrawals only. In Hong Kong, the exchange committed to compliance with the SFC’s Anti-Money Laundering Code of Conduct upon relaunching its crypto trading platform post-2021 crackdown. The September 2023 security breach prompted interim suspension of deposit and withdrawal functions to secure assets.

Links to Reports / Sources

Case Title / Operation Name:

CoinEx Token Regulatory and Money Laundering Enforcement Issues in Hong Kong and International Jurisdictions

Country(s) Involved:

China, United States

Platform / Exchange Used:

CoinEx Global Limited, a Hong Kong-based cryptocurrency exchange platform

Cryptocurrency Involved:

CoinEx Token (CET) as native utility token, alongside major cryptocurrencies BTC, ETH, USDT, XRP, SOL, Kadena used in laundering and trading operations

Volume Laundered (USD est.):

Estimated laundering and illicit transfer volumes remain undisclosed; however, security breaches led to loss of approx. US$43 million in cryptocurrencies, and regional criminal syndicates laundered approximately US$15 million via Crypto assets; $1.7 million in penalties involved in regulatory settlements

Wallet Addresses / TxIDs :

Multiple suspicious wallet addresses linked to hacking incidents and laundering identified by blockchain forensic firms; specific addresses linked with theft and illegal transfers including ETH, BTC, XRP, Solana tokens

Method of Laundering:

Use of peer-to-peer (P2P) trading, layering via multiple cryptocurrencies, mixing services, use of mule bank accounts to convert fraud proceeds to crypto, geoblocking evasion, unregistered account access for restricted jurisdictions, and obfuscation through multiple transaction steps

Source of Funds:

Fraud proceeds, hacking theft, illegal securities trading, potential involvement of dark web market transactions, and cross-border financial crimes involving bank accounts linked to friends, family, and mule networks

Associated Shell Companies:

No publicly disclosed information about specific shell companies directly linked to CoinEx or its laundering activities; investigations continue regarding corporate front entities

PEPs or Individuals Involved:

No explicit evidence of involvement of Politically Exposed Persons (PEPs) has been publicly reported in connection with CoinEx’s laundering or regulatory breaches; primary focus remains on corporate and platform compliance

Law Enforcement / Regulatory Action:

New York Attorney General sued CoinEx in 2023 for operating without registration, resulting in a $1.7 million settlement and ban from serving New York residents; Hong Kong regulatory authorities tightened oversight and licensing for crypto exchanges; multiple arrests in Hong Kong related to cross-border crypto laundering syndicates; security breach led to service suspension and user compensation commitment

Year of Occurrence:

2023 (major enforcement events and hack), with ongoing investigations and arrests extending through 2024-2025

Ongoing Case:

Ongoing

AML Network Risk Rating:

🔴 High Risk