U.S. Securities and Exchange Commission (SEC) and the State of New York allege that Coinseed defrauded investors of $1 million through concocted statements, hidden fees and worthless tokens.

New York's attorney general Letitia James filed a lawsuit on Wednesday to shut down the cryptocurrency platform Coinseed Inc. for allegedly defrauding investors of more than $1 million

• by charging hidden trading fees
• through trading of cryptocurrencies such as bitcoin without registering as a broker-dealer, and
• selling "CSD" tokens without authorization to raise money for its mobile application startup

As per the U.S. Securities and Exchange Commission the aforementioned tokens were sold from December 2017 to May 2018.

ALLEGATIONS

"Unregulated and fraudulent virtual currency entities, no matter how big or small, will no longer be tolerated in New York," James said in a statement.

The attorney general said Coinseed had claimed the CSD token as "a great opportunity for young people who want to make money in the crypto market," and that the mobile app was "guaranteed" to help push its market value higher.

RESPONSE

"I'm 100% sure that the suit is full of false accusations," Davaasambuu said in an email, referring to James' lawsuit. "It's very strange that they're blaming the very nature of how a startup works." Lkhagvadorj could not immediately be reached for comment.

Davaasambuu also said Coinseed left New York in 2019 and has not accepted users from the state since 2018.

According to Davaasambuu, Coinseed didn't allow any US investors to participate in its ICO, hasn't received any complaints from investors, and has paid out dividends to coin holders since 2018.

He also claimed that no cryptocurrency exchange has licensed commodities broker-dealers, and that "they're trying to make us an example" to force all cryptocurrency firms to have licensed brokers. He also denied the allegation that Coinseed charged extra fees.