New York AG James takes action against Coinseed for “new fraudulent conduct”

Rick Steves

Coinseed and its two top executives stand accused of having sold digital asset securities called “CSD tokens” to hundreds of investors from at least December 2017 to May 2018. AG James said Coinseed’s fraud totaled more than $1 million.

new york

New York Attorney General Letitia James has taken legal action to immediately halt Coinseed’s operations nearly three months after the department pressed charges against the cryptocurrency trading platform and its two top executives, including founder and Chief Executive Officer Delgerdalai Davaasambuu.

Since February, the crypto venue continued its “fraud and the Office of the Attorney General (OAG) has learned of new fraudulent conduct”, said the statement, which led AG James to ask for a temporary restraining order, a preliminary injunction, and the appointment of a receiver to immediately block Coinseed and its CEO from making any further unauthorized trades and safeguarding investors’ monies.

“Unregulated and fraudulent virtual currency trading platforms have no place in New York. Three months ago, we filed this case against Coinseed and its executives alleging that they violated New York state laws and illegally squandered investors’ monies”,
Attorney General James stated.

“However, in the months since we filed our suit, the greed perpetrated by Coinseed and its CEO has not only continued but grown. This company has continued to operate illegally — holding investors’ funds hostage and conducting unauthorized trades in investors’ portfolios while depleting accounts and transferring virtual currency to an offshore, unregulated trading platform. We filed this motion to immediately halt Coinseed’s unlawful activity and protect the investments that are left.”

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 at the time.

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 tone of the New York Attorney’s Office on crypto has become more aggressive ever since its capitalization market went through the roof late last year. In early March, AG James was clear: “Either play by the rules or we will shut you down”.

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