On Wednesday, New York’s Attorney General filed a lawsuit to close down the Coinseed Inc cryptocurrency platform for potentially defrauding ($1 million) thousands of customers, including by charging hidden trading rates and offering digital tokens that are ‘worthless.’
We're suing to shut down the cryptocurrency trading platform @coinseedapp after the company defrauded thousands of investors out of over a million dollars to line the pockets of its executives.
We won't hesitate to take on fraudulent entities and protect investors' wallets.
— NY AG James (@NewYorkStateAG) February 17, 2021
Attorney General Letitia James of New York has said she is working to close down the app and bar Coinseed’s creators from potential investment schemes. The U.S. Securities and Exchange Commission brought a similar complaint against Coinseed.
As per Reuters, New York Attorney General also sued Delgerdalai Davaasambuu, Chief Executive of Coinseed, and former Chief Financial Officer Sukhbat Lkhagvadorj, saying they inflated the management experience, while Lkhagvadorj misrepresented himself as a former Wall Street trader.
“I’m 100% sure the suit is full of false charges,” Davaasambuu said in an email as per Reuters, responding to James’ complaint. “It’s very odd that they blame the very nature of how a startup works”. Coinseed did not respond immediately to requests for responses. Both defendants live in Long Island City, New York, but Mr. Davaasambuu expressed his wish to return to his native Mongolia, Attorney General James said.
The complaint claims that Coinseed funded its “fraudulent” business by providing an initial coin offering that sold CSD tokens, Coinseed’s cryptocurrency, to collect funds for its mobile app launch without authorization. Coinseed and Davaasambuu sold digital asset securities called “CSD tokens” to hundreds of investors, including investors based in the US. The complaint alleges that Coinseed and Davaasambuu did not file a registration statement for the offering, and that the offering failed to satisfy any exemption from registration. The complaint further alleges that by failing to file a registration statement, Coinseed denied prospective investors the information required for such an offering to the public. As alleged, through the offering Coinseed raised at least $141,410.
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