New York Attorney General shuts down Coinseed for converting customer funds into Dogecoin without consent


On September 13, the New York State Supreme Court Justice Andrew Borrok ordered
crypto exchange Coinseed Inc. to permanently shut down operations and pay $3
million as fine, in which New York Attorney
General (NYAG) Letitia James accused the company of
freezing withdrawals and converting customer funds into Dogecoin (DOGE) without
consent.
According to Bloomberg, the
exchange also emptied its bank accounts and issued unlicensed securities. The
NYAG has won a victory on Monday against cryptocurrency trading platform Coinseed
for its dubious dealings with DOGE and deceiving its clients.
The court order has ended a years-long legal spat between
NYAG James & Coinseed and its CEO Delgerdalai Davaasambuu. James also
accused the company of bilking investors out of millions. Justice Andrew Borrok
also ordered a $3 million judgment against Coinseed to be paid to deceived
investors and put in place a permanent receiver who has taken control of the
company’s website.
“For years, Coinseed and its CEO have engaged in
egregious and fraudulent activities that have cheated investors out of
millions,” James
said in a statement.
“In defiance
of court orders, this company has continued to operate illegally and
unethically, holding investors’ funds hostage and underscoring the dangers of
investing in unregistered virtual currencies,” she added.
The NYAG first charged Coinseed in February, accusing the
company of charging hidden fees, making false claims, and selling “worthless”
digital tokens. James also prosecuted Davaasambuu and Chief Financial
Officer Sukhbat Lkhagvadorj, for defrauding thousands of
investors out of more than $1 million and overstated the midtown Manhattan-based company’s
management experience, while Lkhagvadorj misrepresented himself as a former
Wall Street trader.
“Unregulated and fraudulent virtual currency entities, no
matter how big or small, will no longer be tolerated in New York,” James said
while the case was going on.
Since initially filing the suit, the Attorney General’s office has
received more than 175 complaints from investors who were worried about
defending their assets from Coinseed, James said. Besides assistant attorneys general Brian Whitehurst
and Amita Singh have reported receiving 170 complaints from Coinseed customers
claiming that their wallet balances had shrunk by “tens of thousands of
dollars” since February.
In June Coinseed was temporarily shut down due to
the court’s temporary restraining order.
However, the company continued to sell unauthorized cryptos, despite the court’s
preliminary injunction order.
Coinseed, announced on Twitter at
that time that it’s “giving away free FLJ (F–k Letitia James) token.”

Joyashree Dey
CBW - External Analyst
INDIA