New York Attorney General Letitia James announced Wednesday that her office has filed charges against crypto investment app startup Coinseed and two of its executives.
In a statement, James accused Coinseed and its leadership of "unlawfully trading cryptocurrencies, like Bitcoin, without being a registered broker-dealer in New York, while simultaneously failing to disclose certain fees associated with the trading of virtual currencies on their investor’s behalf." CEO Del Davaasambuu and CFO Sukhbat Lkhagvadorj were also named as defendants in the NYAG's court filing, which was submitted in the New York County State Supreme Court.
Per the statement, the NYAG lawsuit aims to "stop Coinseed and the two individual defendants from further operating as unregistered commodities broker-dealers through their mobile application, as well as return investments of Coinseed’s worthless cryptocurrency, the CSD token."
"For over three years, Coinseed and its executives flagrantly and illegally violated New York state laws, but the corporate greed perpetrated by Coinseed while committing fraud against thousands of investors ends now. This lawsuit should send a clear message to all those trading cryptocurrencies that my office will work tirelessly to ensure transparency and fairness in the market and will not hesitate to protect investors’ wallets against all those who seek to defraud them," James said in a statement.
In statements to The Block, Davaasambuu said that the NYAG's lawsuit is "full of false accusations. Embarrassingly bad."
"They’re suing us over our ICO of 2017: We didn’t allow any US investors to participate in the ICO. And there is no token holders that are suing us nor any kind of complaints about it. And we’ve been paying dividend to our token holders since 2018," Davaasambuu said in an email. "They’re using Martin Act which is probably the worst law in America. And Coinseed has left NY in 2019 and we haven’t accepted any users from NY since 2018."
He went on to say:
"They’re claiming that we’re an unregistered commodities broker-dealers. However, there is not a single cryptocurrency exchange has commodities broker-dealers license nor any guidelines from . This has a very huge implication and they’re trying to make us an example to force all crypto companies to have commodities broker-dealers."
Davaasambuu added that Coinseed is seeking legal representation.
Read a copy of the complaint below:
Complaint by MichaelPatrickMcSweeney on Scribd
Editor's Note: This report has been updated with additional information and comment from Coinseed.