New York Attorney General seeks digital currency whistleblowers ‘deceived’ by VASPs

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New York Attorney General Letitia James is courting digital asset whistleblowers in New York, calling on anyone who has been “deceived” by a virtual asset service provider (VASP) to contact her office.

In recent months, investors have lost hundreds of billions in crypto investments, and crypto businesses have frozen withdrawals, announced mass layoffs, and gone bankrupt. 
  
If New Yorkers think they've been deceived by crypto platforms, contact us: https://t.co/aoSG39XTQO

— NY AG James (@NewYorkStateAG) August 1, 2022

In an August 1 press release, James noted that there had been several upheavals in the industry, with many New Yorkers being adversely affected by major events in the industry. Many have been left in financial ruin due to freezing of withdrawals, mass layoffs, or bankruptcy filings, she noted.

James is interested in hearing from “New York investors who have been locked out of their accounts, who are unable to access their investments, or who have been deceived about their cryptocurrency investments.”

She further called on any New Yorker working at a digital asset firm who may have witnessed any misconduct to file a report with her office.

“The recent turbulence and significant losses in the cryptocurrency market are concerning. Investors were promised large returns on cryptocurrencies, but instead lost their hard-earned money. I urge any New Yorker who believes they were deceived by crypto platforms to contact my office, and I encourage workers in crypto companies who may have witnessed misconduct to file a whistleblower complaint,” she stated.

The AG specifically pointed to the collapse of Terra and its two associated tokens—UST and LUNA—as a significant event in which New Yorkers lost hundreds of billions of dollars. Other significant events include the freezing of withdrawals and subsequent bankruptcy filings by Voyager and Celsius, as well as the collapse of Delaware firm Stablegains.

The AG has been going after rogue digital currency firms for quite some time now, with some of her most renowned efforts being going after Tether and its sister firm Bitfinex. James also went after and issued cease-and-desist letters to Nexo and Celsius last year, several months before the latter imploded and collapsed.

James’ zeal has been criticized by some of the companies she has gone after, with one company, in particular, accusing her of bias. Coinseed, an automated digital trading app, was ordered to shut down last year by the AG for reportedly selling worthless tokens and operating without a broker-dealer license.

Coinseed founder claimed that the AG bullied the firm and strong-armed it into an unfavorable agreement as the startup didn’t have the resources to fight back.

“Coinseed is a small startup with little money and we couldn’t hire good lawyers to fight them in the court which would cost millions of dollars. We’re not Ripple,” Delgerdalai Davaasambuu claimed.

The Coinseed founder felt so aggrieved that he built and launched an ERC-20 token which he named “FLJ (F*ck Letita James)” for sale on DeFi platforms.

Watch: SEC Commissioner Hester Peirce on Bitcoin Association’s Blockchain Policy Matters