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Cryptocurrency trading platform Coinseed is shutting down after being sued by New York Attorney General Letitia James earlier this year for fraud.
“I’m announcing that I am winding down the business due to a lawsuit from the NYAG,” Del Davaasambuu, Coinseed cofounder and CEO, said in a statement found on the landing page of the company website.
The saga began on February 17 when James filed a lawsuit against the company for defrauding investors out of more than $1 million via undisclosed fees and through the sale of “worthless” CSD tokens, Coinseed’s cryptocurrency.
According to a filing, Coinseed on April 16 converted all investor assets into bitcoin “without notice or authorization” and disabled all functionality in the application so that they will not be able to withdraw their money. Later on the same day, Coinseed traded the bitcoins for dogecoin.
The office of the AG said it received more than 170 complaints from investors who were concerned about protecting their assets in the first three months after filing the lawsuit.
Then on June 7, the office of the attorney general secured a court order to halt what it called the illegal and fraudulent operations of 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.
But Davaasambuu maintains his company did nothing wrong.
“There are still no regulations about how to classify cryptocurrencies and what kind of licenses they should obtain to run a business in the US,” he said in a post on the company’s website. “We don’t even have a clear guidance on how to pay crypto-related taxes.”
He added that after their initial coin offering in 2017, James and her office were “constantly harassing” them.
“We couldn’t even list our token in other exchanges because of their constant pressures and bullying,” he said. “Coinseed is a small startup with little money and we couldn’t hire good lawyers to fight them in the court which would cost millions of dollars.”
The CEO called James a “business-abuser” who chased after him and his company until all his team members left. Davaasambuu also blamed the series of events for the breakdown in his mental health.
Davaasambuu added that user funds will be returned soon once they hire a team of lawyers. Coinseed’s payment providers terminated their account in February, he said, due to the lawsuit.
He also said that the “fatal” mistake he made since founding his company in 2017 was living in New York.