- New York attorney general Letitia James announced a lawsuit Wednesday against cryptocurrency trading platform Coinseed.
- The state attorney general is seeking to shut down the app and ban the founders of Coinseed from future investment schemes.
- The lawsuit says Coinseed financed its “fraudulent” company by conducting an initial coin offering that sold “worthless” CSD tokens.
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The New York attorney general on Wednesday announced a lawsuit against cryptocurrency trading platform Coinseed for defrauding investors out of more than $1 million via undisclosed fees and through the sale of “worthless” CSD tokens.
New York attorney general Letitia James said she is seeking to shut down the app and ban the founders of Coinseed from future investment schemes.
The lawsuit states Coinseed financed its “fraudulent” company by conducting an initial coin offering that sold CSD tokens, Coinseed’s cryptocurrency, to raise money for its mobile application startup without authorization.
James is seeking restitution for investors.
“Unregulated and fraudulent virtual currency entities, no matter how big or small, will no longer be tolerated in New York,” Attorney General James said in a statement. “For over three years, Coinseed and its executives flagrantly and illegally violated New York state laws, but the corporate greed perpetrated by Coinseed while committing fraud against thousands of investors ends now.”
James said Coinseed was also operating despite not having a BitLicense, which is issued by the New York State Department of Financial Services, or a federal clearance.
The attorney general stated further that Coinseed was adding an “undisclosed markup to the quoted price to extract additional fees from investors” despite advertising low fees.
In addition to the company, the attorney general is also suing Coinseed CEO Delgerdalai Davaasambuu and CFO Sukhbat Lkhagvadorj for “luring in investors with false claims about their professional experiences and the role of their management team.”
Coinseed is facing a related and separate lawsuit from the Securities and Exchange Commission.
According to the SEC’s complaint, Coinseed sold CSD tokens to hundreds of investors from at least December 2017 to May 2018 and raised at least $141,410.