New York Attorney General Letitia James won a court order forcing the closure of cryptocurrency exchange Coinseed.
According to a statement from the Attorney General’s Office, the order against Coinseed Inc. and founder Delgerdalai Davaasambuu “permanently halts their illegal and fraudulent operations.” The order also appoints a permanent receiver to take control of the platform’s website and protect investors’ funds. Additionally, the court order awarded a $3 million judgment against the defendants.
The state had earlier accused the tiny cryptocurrency trading platform of illegally selling securities. Coinseed had also improperly acted as a broker-dealer, prior to putting “every investor’s holdings into one single, extremely volatile virtual currency (named Dogecoin) which rises and falls dramatically in price in a matter of hours on any given day,” behind its customers’ backs, James said in a May court filing.
This order marks the fulfillment of an earlier court order, which had technically ordered the continuation of a mandated pause on Coinseed’s operations. The order issued by the New York County State Supreme Court on June 4 also appointed Michelle Gitlitz as the special receiver.
Earlier, Attorney General James filed for a temporary restraining order, preliminary injunction and the appointment of a receiver against Coinseed. She accused Coinseed of defrauding customers and locking them out of their cryptocurrency accounts.
According to James, Coinseed received an influx of withdrawal requests from investors seeking to profit from Bitcoin’s spike in value. “Rather than convert virtual currency to fiat currency to honor these requests, Defendants first reduced the daily withdrawal limit from $1,000 a day to $250 a day, and then ultimately disabled withdrawals altogether,” the original February 17, 2021 complaint stated.
The Attorney General initially filed the lawsuit against Coinseed, as well as founder and CEO Delgerdalai Davaasambuu in February. However, she claims that even after, Coinseed and its CEO had “continued their fraud.” Over the subsequent three months, the Office of the Attorney General had received more than 170 complaints from concerned investors.