Coinseed Shuts Down Following Lawsuit, Slams NYAG Letitia James

Coinseed Shuts Down Following Lawsuit, Slams NYAG Letitia James

Automated crypto trading app Coinseed announced Tuesday it will cease operations due to a lawsuit by New York Attorney General Letitia James.

The lawsuit, originally filed in February, accused Coinseed of swindling its users of $1 million through an unregistered initial coin offering (ICO) in 2018, as well as hidden fees and false claims. James’ lawsuit also accused Coinseed, which does not have a BitLicense or federal clearance, of operating as an unregistered commodities broker-dealer.

The closure comes as regulators at the state and federal levels seek out crypto firms allegedly operating in bad faith. Late last month U.S. officials hit five promoters of the infamous Bitconnect with securities fraud charges.

In May, James filed a court motion to shut down Coinseed’s operations and freeze its trading activity. New York State Supreme Court Judge Andrew Borrok appointed Washington, D.C.-based attorney Michelle Gitlitz as the company’s receiver.

On Monday, the NYAG finally received a court order to shut down Coinseed.

“When platforms operating illegally in New York seek to trade on investors’ money, we will use every tool at our disposal to stop their unlawful actions,” James said in a statement released Monday. “This order appoints a court-appointed receiver before any other investments are squandered by Coinseed and its CEO.”

Coinseed strikes back

Coinseed CEO Delgerdalai Davaasambuu responded via a lengthy statement posted on Coinseed’s website, calling the shutdown “immensely mournful and frustrating.” Davaasambuu denied the claims made in the NYAG’s lawsuit, saying the company’s only mistake was “simply living in New York.”

Davaasambu also wrote that the company has not received any complaints from its users, despite James’ claim that the NYAG’s office had received over 170 complaints since filing the suit in February. Several complaints alleged that users’ crypto balances were converted to dogecoin without their consent, including one user who said his $48,000 position in various cryptocurrencies became $31,000 in DOGE overnight.

In a postscript at the end of his statement, Davaasambuu appeared to address these allegations, writing: “As for the Dogecoin, I’m good at trolling!”

In his statement, Davaasambuu said Coinseed didn’t have the financial resources to fight the charges and is interviewing law firms to figure out how to return user funds.

Davaasambuu also encouraged users and supporters to “please annoy the NYAG as much as you can.” After news of the shutdown, the Coinseed landing page now features a countdown for the drop of a free token called FLJ (“F***LetitaJames”), which the website says will soon be listed on various DeFi platforms.