New York’s Attorney General, Letitia James, has filed a lawsuit to shut down the crypto trading platform Coinseed for apparently defrauding thousands of investors by selling worthless digital tokens while ignoring the securities laws of the state. James alleges that the firm fraudulently sold its own currency that wasn’t registered in New York. The total fraud amounts to more than $1 million with James demanding restitution for investors. In response to this, the U.S. Securities and Exchange Commission (SEC) has also filed a related lawsuit against Coinseed.

Coinseed Unlawfully Traded Cryptocurrencies in New York

The lawsuit alleges that Coinseed and its two top executives, CEO Delgerdalai Davaasambuu and CFO Sukhbat Lkhagvadorj, unlawfully traded cryptocurrencies without officially registering themselves as broker-dealer in New York. The two executives even lied about their professional experience. For instance, despite having little financial services experience, Lkhagvadorj misrepresented himself as a former Wall Street trader.

Coinseed also sold its own CSD token, to fund its trading platform. However, the company wasn’t registered legally to do so. Three years down the line, the CSD token was not anywhere to be listed. The lawsuit further alleges that Coinseed added extra undisclosed fees to trades, while advertised itself as a low-fee trading platform.

The lawsuit is looking to bar Coinseed and its executives from participating in any future securities offerings or as commodities broker-dealers.

The matter was investigated in parallel with the U.S. Securities and Exchange Commission, which filed a related but separate lawsuit against Coinseed.

Coinseed Denied All the Allegations

Delgerdalai Davaasambuu, the CEO of Coinseed, has denied all the allegations of the New York Attorney General, saying:

“I’m 100% sure that the suit is full of false accusations. Embarrassingly bad.”

According to Davaasambuu, Coinseed didn’t allow any U.S. investors to participate in its ICO. He further says that he hasn’t received any complaints from investors, and has paid out dividends to coin holders since 2018.  He also claimed that no crypto exchange has licensed commodities broker-dealers. According to him, the lawsuit intends to force all cryptocurrency firms to have licensed brokers.