Attorney General James Shuts Down Virtual Currency Trading Platform and Stops Cryptocurrency CEO From Continuing Fraudulent Conduct

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Bitcoin crypto currency Clifford Photography

Coinseed Put Thousands of Investors’ Money at Risk Despite Ongoing Lawsuit

NEW YORK – New York Attorney General Letitia James today secured a judgment against the virtual currency trading platform Coinseed, as well as founder and Chief Executive Officer (CEO) Delgerdalai Davaasambuu, that permanently halts their illegal and fraudulent operations and puts in place a permanent receiver to protect investors’ funds. The receiver has also taken control of the company’s website so that it may no longer be used as part of the defendants’ fraudulent schemes. Additionally, the court awarded a $3 million judgment against the defendants. In February, Attorney General James filed a lawsuit against Coinseed and its CEO for defrauding thousands of investors across the nation out of millions of dollars. In the months since the suit was filed, Coinseed and its CEO have continued their fraud and commenced additional fraudulent conduct by trading in investors’ accounts without permission and then blocking investors from accessing those accounts.

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In June, the New York County State Supreme Court granted Attorney General James’ motion for a preliminary injunction and the appointment of a temporary, court-appointed receiver with special powers to safeguard investments already made on the trading platform. Coinseed and its CEO defied that preliminary injunction by creating, offering, and selling a new virtual currency — including to New York investors — and failed to respond to Attorney General James’ complaint. 

“For years, Coinseed and its CEO have engaged in egregious and fraudulent activities that have cheated investors out of millions,” said Attorney General James. “In defiance of court orders, this company has continued to operate illegally and unethically, holding investors’ funds hostage and underscoring the dangers of investing in unregistered virtual currencies. We will continue to pursue all who attempt to abuse and manipulate the system and ensure investors are protected.”

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Since Attorney General James filed this lawsuit, the Office of the Attorney General received more than 175 complaints from investors who were concerned about protecting their assets due to Coinseed’s fraudulent conduct. The judgment secured by Attorney General James today permanently appoints the court receiver to obtain, safeguard, and return all assets invested and traded through Coinseed and orders a money judgment against the defendants in the amount of $3,061,511, both together and separately. Investors who are victims of Coinseed’s fraud should contact the court-appointed receiver at CoinseedReceiver@crowell.com to obtain information about their ability to request funds.

The matter is being handled by Assistant Attorneys General Brian M. Whitehurst and Amita Singh of the Investor Protection Bureau, under the supervision of Acting Bureau Chief Scott J. Spiegelman, Acting Deputy Bureau Chief Shamiso Maswoswe, and former Bureau Chief Peter Pope. The Investor Protection Bureau is a part of the Division for Economic Justice, which is overseen by Chief Deputy Attorney General Chris D’Angelo and First Deputy Attorney General Jennifer Levy.

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