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By Jonathan Stempel
NEW YORK, Feb 17 (Reuters) - New York's attorney generalfiled a lawsuit on Wednesday to shut down the cryptocurrencyplatform Coinseed Inc for allegedly defrauding thousands ofinvestors, including by charging hidden trading fees and selling"worthless" digital tokens.
Attorney General Letitia James said Coinseed tradedcryptocurrencies such as bitcoin without registering as abroker-dealer, and sold "CSD" tokens without authorization toraise money for its mobile application startup.
James also sued Coinseed Chief Executive DelgerdalaiDavaasambuu and Chief Financial Officer Sukhbat Lkhagvadorj,saying they overstated the midtown Manhattan-based company'smanagement experience, while Lkhagvadorj misrepresented himselfas a former Wall Street trader.
Coinseed's fraud totaled more than $1 million, according toJames, who is also seeking restitution for investors.
The U.S. Securities and Exchange Commission filed a relatedlawsuit against Coinseed and Davaasambuu over the tokens, whichboth regulators said were sold from December 2017 to May 2018.
Coinseed did not immediately respond to requests forcomment. Both defendants have residences in Long Island City,New York, but Davaasambuu has expressed an intention to returnto his native Mongolia, James said.
"Unregulated and fraudulent virtual currency entities, nomatter how big or small, will no longer be tolerated in NewYork," James said in a statement.
The attorney general said Coinseed had touted the CSD tokenas "a great opportunity for young people who want to make moneyin the crypto market," and that the mobile app was "guaranteed"to help push its market value higher.
"In truth, nearly three years later, the CSD token has notbeen listed anywhere," her lawsuit said.
James' lawsuit in Manhattan Supreme Court alleged violationsof the Martin Act, a New York state securities law. The SEC'slawsuit is in Manhattan federal court.(Reporting by Jonathan Stempel in New York; Editing by SteveOrlofsky)