Coinseed ordered to shut down and pay $3M in relief in win for NYAG

Coinseed ordered to shut down and pay $3M in relief in win for NYAG

Seven months since it first cracked down on a digital currency startup over its “worthless” tokens, the New York Attorney General’s office has won a court order shutting it down. New York’s Supreme Court ordered Coinseed to shut down its services and to pay over $3 million in relief in a default judgment.

In February, NYAG Letitia James announced that she was going after Coinseed which she said had been defrauding investors since 2017. The startup, which let users invest spare change in digital currencies and trade them on its platform, sold its CSD tokens to the investors, some of them in New York. However, to James, the tokens were a “worthless cryptocurrency” and an “unregistered security.”

This week, Judge Andrew Borrok issued a default judgment against Coinseed and its founder Delgerdalai Davaasambuu. The defendants did not formally respond to the charges, according to the judge. Their time to plead expired last June 4.

In his ruling, Borrok stated the defendants are permanently enjoined from engaging in deceptive and illegal acts or the issuing, selling, or purchasing any securities or commodities. They must also pay $3,053,511 in restitution and $8,000 collectively in additional allowances.

In its charges filed in early 2021, the NYAG’s office said Davaasambuu lied to investors about the leadership of the firm and their credentials as well as about the value of their native token. At the time, the founder refuted the charges and said he’s “100% sure that the suit is full of false accusations.”

In June, however, Davaasambuu announced that Coinseed would be shutting down—all while making claims that James and the New York authorities were allegedly involved in malicious and biased charges against the ‘smaller guy’ to protect the bigger companies. He also pledged to refund all the investors.

As a parting shot, he announced that he had created an ERC-20 token specifically to protest and spite AG James. “As for the NYAG Letita James and her cronies, I have created a dedicated token FLJ (F*ck Letita James),” he claimed.

Watch: CoinGeek Zurich panel, Bitcoin and Digital Assets – Where Should Real Value Come From?

YouTube video

New to blockchain? Check out CoinGeek’s Blockchain for Beginners section, the ultimate resource guide to learn more about blockchain technology.