The New York State Department of Justice has taken strict legal action against major players in the cryptocurrency industry. New York Attorney General Letitia James has formally filed a lawsuit against the well-known cryptocurrency exchanges Coinbase and Gemini, accusing them of operating unauthorized and illegal "prediction markets" within the state.
According to the court documents, the prosecutors believe that the businesses of the two companies essentially constitute illegal gambling. The charges indicate that these platforms allowed minors under the age of 21 to place bets, which seriously violates the mandatory age requirements for gambling in New York State. In addition, the lawsuit specifically mentioned that the platforms violated the ban on betting on New York University (NYU) team events, further increasing their suspicion of wrongdoing.
The Office of the New York State Attorney General made its position clear in a statement, directly pointing out that Coinbase and Gemini had intentions to evade taxes. The prosecutors believe that these cryptocurrency companies attempted to avoid the tax obligations required by licensed casinos and mobile sports betting platforms, gaining an unfair competitive advantage through illegal channels.
Currently, New York State has applied to the court for a substantial compensation. It is reported that the state is seeking a huge fine, equivalent to three times the profits these two companies have earned in New York State. With the sudden increase in regulatory pressure, the capital market has responded quickly. As of now, Coinbase (COIN) stock has dropped more than 7%, and Gemini-related assets have also shown significant fluctuations. The subsequent developments of this case may have a profound impact on the compliance operations of the cryptocurrency industry in the United States.
