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

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Joyashree Dey Follow

INDIA

Sep, 20 2021

Sep, 20 2021

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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.”


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Joyashree Dey

CBW - External Analyst

INDIA

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