Automated digital trading app Coinseed is shutting down. The app’s founder Delgerdalai Davaasambuu announced the shutdown this week, blaming all his firm’s woes on New York Attorney General Letitia James, after the NYAG sued the company in February over allegedly selling a worthless token and defrauding investors.
Coinseed conducted its ICO in 2017, raising $1 million by selling its native CSD tokens. Not long after, it would have its first run-in with the NYAG’s office. As Davaasambuu revealed in a blog post announcing the shutdown, the NYAG has been investigating the company since then. However, it was Letitia James—who took over after the investigation had already commenced—who launched a lawsuit against the company in February this year, accusing the company of selling worthless tokens.
This week, James revealed that she had obtained a court order “that continues a mandated pause on the illegal and fraudulent operations of the cryptocurrency trading platform Coinseed, Inc. and puts in place a receiver to ensure the protection of investors’ money going forward.”
The NYAG has appointed Michelle Gitlitz, the global head of Crowell & Moring LLP’s Blockchain and Digital Assets practice, as receiver. She will have special powers to safeguard investments already made on the trading platform.
James remarked, “We will not allow rogue operators to hold innocent investors’ funds hostage, while they deplete accounts and transfer virtual currency to an offshore, unregulated trading platform. We will continue fighting for the thousands of investors defrauded by Coinseed.”
The NYAG further claimed that in the first three months since she filed the lawsuit against Coinseed, more than 170 investors filed complaints, “concerned about protecting their assets due to Coinseed’s fraudulent conduct.”
In its blog post, Coinseed detailed its side of the story, one that it claimed involved malicious and biased charges and investigations. The founder claims that the NYAG had offered to settle and they agreed, only for the regulator to change her mind the next day.
Davaasambuu also tore into the NYAG’s charges that Coinseed is an unregistered broker dealer in New York.
“It’s very laughable since no other cryptocurrency exchanges have become a registered broker-dealer. According to the NYAG, Coinbase, Kraken, and Gemini are all unregistered broker-dealers since they don’t have any broker-dealer licenses,” he alleged. However, unlike Coinseed, these giants “have enough money to fight in court.”
“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,” the founder went on, referring to the blockchain payments firm that’s embroiled in a legal battle with the SEC.
Davaasambuu pledged to refund the user funds, revealing that he was interviewing law firms to facilitate the process. Due to the lawsuit, Coinseed has lost access to its banking partners, and as such, the refunds have become a bit more complicated, he explained.
In the most unexpected twist, he revealed that he had created a new ERC-20 token, specifically to protest against NYAG James.
“As for the NYAG Letita James and her cronies, I have created a dedicated token FLJ (F*ck Letita James)… It’ll be listed on various DeFi platforms soon and will be available for trading.”
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