Key Takeaways
- • New York Attorney General Letitia James sued Coinbase and Gemini for operating illegal, unlicensed gambling platforms through their prediction market offerings, which allow users to bet on sports, entertainment, and election outcomes in violation of state law.
- • Uphold HQ Inc. agreed to pay $5 million to settle New York AG claims that it promoted Cred Inc.'s fraudulent cryptocurrency scheme, for which Cred's former executives received prison sentences in 2025.
- • The AG's office has secured over $22 million from KuCoin and continues an aggressive enforcement campaign against cryptocurrency exchanges operating in New York without proper licensing or consumer protections.
- • Prediction markets offered by Coinbase and Gemini meet New York's legal definition of gambling because outcomes are uncertain and outside the bettor's control, exposing users under 21 to addictive, unregulated platforms lacking required safeguards.
- • The AG is seeking court orders requiring defendants to pay fines, forfeit illegal profits, and provide restitution to affected customers across multiple enforcement actions.
Summary
New York Attorney General Letitia James has escalated enforcement against cryptocurrency platforms, filing suit against Coinbase and Gemini for operating what the AG characterizes as illegal gambling operations disguised as prediction market platforms. The lawsuit alleges that both companies allow New York residents aged 18 and older to bet on the outcomes of future events—including sports, elections, and entertainment awards—in direct violation of state gambling laws. Because the outcomes of such events are uncertain and outside the control of the bettor, or hinge on chance, the AG determined these platforms meet New York's legal definition of gambling and therefore require proper licensing and regulatory oversight.
Attorney General James stated in her enforcement action: "Gambling by another name is still gambling, and it is not exempt from regulation under our state laws and Constitution." The AG emphasized that these unregulated prediction market platforms expose young people to addictive betting mechanisms without the consumer protections required of licensed gambling operators. The lawsuits seek court orders requiring Coinbase and Gemini to pay fines, forfeit profits derived from illegal gambling operations, and provide restitution to affected New York customers.
This enforcement action is part of a broader crackdown by the New York AG's office on cryptocurrency platforms operating within the state. In a related settlement announced on April 29, 2026, cryptocurrency platform operator Uphold HQ Inc. agreed to pay $5 million to resolve claims that it promoted the fraudulent cryptocurrency scheme operated by now-bankrupt Cred Inc. Cred's former executives were sentenced to prison in 2025 for their roles in the scheme. Additionally, the AG's office has previously secured over $22 million from KuCoin, one of the largest cryptocurrency exchanges, demonstrating sustained regulatory pressure across the sector.
The enforcement pattern reflects the New York AG's position that the cryptocurrency industry requires stricter market structure regulation and consumer protection standards. The office has opened investigations into multiple digital asset operators and continues to pursue cases against platforms that it determines are either operating unlicensed gambling facilities or promoting fraudulent investment schemes without adequate disclosure or safeguards.
Attorney General James stated in her enforcement action: "Gambling by another name is still gambling, and it is not exempt from regulation under our state laws and Constitution." The AG emphasized that these unregulated prediction market platforms expose young people to addictive betting mechanisms without the consumer protections required of licensed gambling operators. The lawsuits seek court orders requiring Coinbase and Gemini to pay fines, forfeit profits derived from illegal gambling operations, and provide restitution to affected New York customers.
This enforcement action is part of a broader crackdown by the New York AG's office on cryptocurrency platforms operating within the state. In a related settlement announced on April 29, 2026, cryptocurrency platform operator Uphold HQ Inc. agreed to pay $5 million to resolve claims that it promoted the fraudulent cryptocurrency scheme operated by now-bankrupt Cred Inc. Cred's former executives were sentenced to prison in 2025 for their roles in the scheme. Additionally, the AG's office has previously secured over $22 million from KuCoin, one of the largest cryptocurrency exchanges, demonstrating sustained regulatory pressure across the sector.
The enforcement pattern reflects the New York AG's position that the cryptocurrency industry requires stricter market structure regulation and consumer protection standards. The office has opened investigations into multiple digital asset operators and continues to pursue cases against platforms that it determines are either operating unlicensed gambling facilities or promoting fraudulent investment schemes without adequate disclosure or safeguards.
Go deeper than the headline
Research every firm in this story, track the ones that matter and get the daily briefing — free for 7 days.