This means war: SEC Charges Coinseed with fraud, AG James warns unregistered cryptos
The statement must be sending chills down many spines in New York, a state that adopted cryptocurrencies early on. While many firms have been granted regulatory approval to operate, it is unclear how many unregistered broker-dealers are still out there. We will find out soon enough.
The Securities and Exchange Commission has charged against crypto trading app Coinseed and its co-founder and Chief Executive Officer, Delgerdalai Davaasambuu for the platform’s offer and sale of digital asset securities.
The SEC alleged that Coinseed and Davaasambuu sold digital asset securities called “CSD tokens” to hundreds of investors, including investors based in the US, from at least December 2017 to May 2018. The complaint filed in federal district court in Manhattan claims that no registration statement for the offering was filed and that the offering failed to satisfy any exemption from registration.
“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”, said the official statement, which added the SEC is seeking permanent injunctive relief, disgorgement plus prejudgment interest, and civil penalties.
Attorney General Letitia James said Coinseed’s fraud totaled more than $1 million: “Unregulated and fraudulent virtual currency entities, no matter how big or small, will no longer be tolerated in New York. 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.
“This lawsuit should send a clear message to all those trading cryptocurrencies that my office will work tirelessly to ensure transparency and fairness in the market and will not hesitate to protect investors’ wallets against all those who seek to defraud them”, Ms. James added.
The statement from Attorney General James speaks volumes of what is driving the SEC to take down Coinseed, who failed to register as commodities broker-dealers through their trading app. “Millions around the country and the world today use cryptocurrencies as decentralized digital currencies — unlike real, regulated government currencies, including the U.S. dollar — to buy goods and services, often times anonymously, through secure online transactions”, said Attorney General James.
“Unregulated and fraudulent virtual currency entities, no matter how big or small, will no longer be tolerated in New York. 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.
“This lawsuit should send a clear message to all those trading cryptocurrencies that my office will work tirelessly to ensure transparency and fairness in the market and will not hesitate to protect investors’ wallets against all those who seek to defraud them”, AG James added.
The statement must be sending chills down many spines in New York, a state that adopted cryptocurrencies early on. While many firms have been granted regulatory approval to operate, it is unclear how many unregistered broker-dealers are still out there. We will find out soon enough.
