A New York Court Orders the Closure of Cryptocurrency Platform ‘Coinseed‘

<p>Prosecutors Charged the Company With Defrauding Thousands of Investors.</p> <p>According to State Attorney General Letitia James, New York officials obtained a court order shutting down cryptocurrency trading site Coinseed after it allegedly scammed thousands of investors of millions of dollars. The court granted Coinseed and its creator and CEO, Delgerdalai Davaasambuu, a $3 million judgement.</p> <p>According to some financial experts, these Ponzi scheme-like activities may continue in the absence of generally agreed-upon legislation that strengthen investor protections against fraud.</p> <p>Prosecutors in New York allege that Coinseed's mobile application, which was available on the App Store and Google Play Store, illegally marketed stocks, operated improperly as a broker-dealer, and traded in investors' accounts without their consent, even limiting account access. Officials claim the activity continued even after Coinseed was sued by James' office in February for allegedly breaching the state's powerful Martin Act, an anti-fraud statute that allows the state attorney general broad authority to prosecute securities fraud investigations.</p> <p>Prosecutors allege that Coinseed - which built its network to between 4,000 and 5,000 investors - improperly invested client cash in the digital currency dogecoin, resulting in investor losses within hours.</p> <p>The attorney general's office in New York declined to speak further. Coinseed's initial attorney of record, Jason Gottlieb of the firm Morrison Cohen LLP, has informed Information Security Group that his firm has withdrawn from the matter following the grant of a motion to withdraw.</p> <p>"Given how hot crypto assets continue to be," Karl Steinkamp, director of PCI product and quality assurance at security firm Coalfire, tells ISMG, "I would anticipate we will continue to see more of these events."</p> <p>Order of the Court</p> <p>Following a preliminary injunction granted in June, the court ruling - delivered Sept. 9 by New York State Supreme Cour