New York Attorney General Letitia James has sued the crypto-investment platform Coinseed Inc. for allegedly defrauding thousands of investors out of more than $ 1 million.
According to the Attorney General, Coinseed and its CEO, Delgerdalai Davaasambu, and former CFO Sukhbat Lkhagvadorj, traded illegally and defrauded investors between 2017 and May 2018:
‘Instead of selling shares, Coinseed sold digital tokens to raise funds to support the growth of its business. Defendants told investors that money raised in the ICO would be used to accelerate [Coinseed’s] growth and global expansion. ”
The allegations set forth in the court documents relate to Coinseed’s violation of the Martin Act, a law on fraud against New York. In the ICO of their CSD token launched in December 2017, Coinseed raised more than $ 100,000 by selling 200,000 tokens.
The attorney general said investors were misled about the potential to take advantage of CSD signs, which were circulated by the accused despite their failure to register as security traders.
“Investors concluded that they would expect profits only from the efforts of the accused to establish, operate and expand the Coinseed mobile application. However, the accused were not registered as security traders with the OAG as required by General Business Law, ”she said.
The complaint also accuses Coinseed’s actions of misleading clients about their professional background and misrepresenting information about the extent to which investors have charged trading fees.
The document also mentions an online report published by Coinseed to entice investors to participate in its ICO:
‘This is a great opportunity for young people who want to make money in the crypto market. Many of them are likely to use the app as a springboard for larger investments in virtual currency. This will definitely play a role in increasing the value of the Coinseed token once it hits the market. ‘
The complaint added: “In fact, almost three years later, the CSD token was nowhere listed.”
However, Davaasambuu told Business Insider he denies the allegations and that Coinseed has not allowed US users to participate in its ICO and has not accepted any New York users since 2018.
“I’m 100% sure the suit is full of false accusations. Embarrassingly bad,” he said.
The attorney general appears intending to discontinue Coinseed operations because she is seeking an order ordering the defendants to pay damages, scrap all amounts obtained, give investors restitution and that they be permanently banned from securities and commodities in New. York.
Letitia James is no stranger to invoking the Martin Act on crypto-based businesses, as she is currently involved in the ongoing lawsuit against Bitfinex and the crypto-exchange issuer Tether. Cases against cryptocurrencies due to unlicensed bonds are also the taste of the month, as seen in the recent SEC case against Ripple Labs and its XRP sign.