New York Attorney General (NYAG), has won a victory against cryptocurrency exchange Coinseed, for its dodgy dealings and deceitful customers.
After Coinseed Inc. was accused of converting client funds into Dogecoin without consent and freezing withdrawals, NYAG Letitia James ordered Coinseed Inc.’s operations to be halted permanently and to pay $3 million in penalties. Bloomberg reports that the exchange also closed its bank accounts and issued securities without licenses.
According to Law360, James found that Coinseed continued to engage in “egregious fraudulent activities” despite previous court orders directing it to close its doors.
“In spite of court orders, the company continued to operate illegally, unethically, and held investors’ funds hostage. This underscores the dangers of investing unregistered virtual currency.”
After a temporary restraining orders, the exchange claimed to have shut down its services in June.
James sued Coinseed founder Delgerdalai Davaasambufor and Coinseed in February for defrauding investors of over $1 million. In February, the U.S. Securities and Exchange Commission filed suit against Coinseed and its founder Delgerdalai Davaasambufor for allegedly trading commodities in violation of broker-dealer registration and misleading investors.
Amita Singh and Brian Whitehurst, Assistant Attorney Generals, have received 170 complaints from Coinseed customers alleging that their wallet balances were down by “tens to thousands of dollars” since February.
Singh claims that Davaasambuu had promised user funds back in the past, but has “completely radio silence” about these allegations.
Related: New York attorney general warns crypto-firms and investors of the ‘extreme risk’
A related legal victory was Michael Ackerman’s Sept. 10 plead guilty to wire fraud in an alleged scheme he and two others orchestrated in 2017.
They ran Q3 Trading Club, promising monthly returns of 15% at the time. If convicted, he faces 20 years imprisonment for causing investor losses up to $30 million.
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