Coinseed to Shut Down and Pay $3M in Fines Following Court Order
- Coinseed was accused of disabling withdrawals, and converting its client funds into Dogecoin (DOGE) without their knowledge.
- The crypto trading app also ignored a temporary restraining order from June, and continued its operation, according to court documents.
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The Supreme Court of the State of New York has ordered crypto trading app Coinseed to close its doors in the state, and pay $3 million in fines, for defrauding its customers, Bloomberg reported on 13 September.
According to court documents, Coinseed Inc. was accused of freezing withdrawals, and then converting its client’s funds into Dogecoin (DOGE) without their consent. The firm and its CEO, Delgerdalai Davaasambuu, have now been ordered to permanently freeze operations in the state of New York and pay $3 million to defrauded investors.
The New York State Attorney General, Letitia James, and the Securities and Exchange Commission first filed a lawsuit against the firm back in February, accusing it of breaking U.S. registration laws — Coinseed had not registered as a broker-dealer as required by the Martin Act — and defrauding investors. Court documents from Feb. state that the firm had illegally conducted an initial coin offering (ICO) in 2018, and then made false claims and charged its customers with hidden fees.
The new court order also states that Coinseed had defied a temporary restraining order from June, which was meant to shut down Coinseed’s activities while the case was ongoing. James said in a statement:
“In defiance of court orders, this company has continued to operate illegally and unethically, holding investors’ funds hostage and underscoring the dangers of investing in unregistered virtual currencies.”
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