New York Attorney General Letitia James has announced plans to file suit against a cryptocurrency trading app known as Coinseed, which she claims has been fraudulent and cheating its investors.
Coinseed Will Face Action from New York Lawmakers
Crypto crime is a serious problem and has been around since the world of digital currency was first brought to international attention roughly 12 years ago. The crypto space has been filled to the brim with theft and cyberattacks that ultimately leave hundreds of millions of dollars in digital currency funds missing through one swift move.
As time has gone by, regulators have sought to ensure that crypto crime cannot continue either through legislative action or by limiting bitcoin activity in the future, like what Treasury Secretary Janet Yellen is proposing at the time of writing. James, however, is looking to go head-to-head with Coinseed and bring it down in court.
It is believed that the company may have stolen a minimum of $1 million from its investors. Coinseed hosted an initial coin offering (ICO) some years ago and ultimately provided investors with tokens that proved to be useless and did not give them access to the company’s services. In addition, the company also stands accused of charging undisclosed fees and markups.
Lastly, Coinseed is believed to have operated without a BitLicense, which virtually every company delving in blockchain and crypto requires if they’re looking to do business in the Big Apple. James says she is eager to not only shut down the operation fully, but she is also looking to ban the founders from any future crypto activity and investments. She also wants financial payments for all who were taken advantage of or who lost money in the firm.
In a statement, she explained:
Unregulated and fraudulent virtual currency entities, no matter how big or small, will no longer be tolerated in New York. For over three years, Coinseed and its executives flagrantly and illegally violated New York state laws, but the corporate greed penetrated by Coinseed while committing fraud against thousands of investors ends now.
Crypto Crime Remains a Heavy Issue
Through the ICO, the company only made about $141,000. Much of its money came from the undisclosed fees. Coinseed is facing a separate lawsuit from the Securities and Exchange Commission (SEC), and according to James, co-founders Delgerdalai Davaasambuu and Sukhbat Lkhagvadorj lied about their managerial backgrounds and past professional experience, and lured investors in with false several claims.
The past few months have seen many examples of crypto crime occurring within the industry. One such case involved a man named Jerry Guo, who spent years pretending to be a crypto consultant and digital currency expert. He got many people to invest, believing that he would place their money in the right outlets, though none of their funds ever made it into any specific crypto ventures.