NEW YORK AG JAMES TAKES ACTION AGAINST COINSEED FOR “NEW FRAUDULENT CONDUCT”
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 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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