The Securities and Exchange Commission and New York Attorney General Letitia James each filed complaints against Coinseed on Wednesday, alleging the company and its founder and CEO, Delgerdalai Davaasambuu, have been unlawfully trading cryptocurrencies.
In a complaint filed in U.S. District Court for the Southern District of New York, the SEC alleged that, from at least December 2017 to May 2018, the defendants offered and sold digital assets called “CSD tokens” as securities to investors, in return for consideration worth at least $141,000.
Among other things, the defendants “offered and sold CSD tokens without registering the offering with the Commission as required by the federal securities laws, and no exemption from this registration requirement was available for the offering,” the SEC alleged.
Also, “in connection with their offer and sale of CSD tokens, Coinseed never provided investors with the type of material information that issuers are required to include in registration statements when soliciting public investment,” the complaint alleged. “Instead, investors were left to rely only on the information Defendants chose to share about Coinseed and CSD tokens,” the SEC alleged.
As a result of their actions, Coinseed and Davaasambuu violated Sections 5(a) and 5(c) of the Securities Act of 1933, the SEC said.
The SEC is looking to permanently enjoin the defendants from continuing to violate securities laws; “disgorge all ill-gotten gains they received directly or indirectly, with pre-judgment interest;” prohibit the defendants from participating, directly or indirectly, in any offering of a digital asset security; and pay civil monetary penalties, according to the complaint.
NY AG’s Complaint
Meanwhile, in a complaint filed in the Supreme Court of the State of New York, County of New York, New York Attorney General Letitia James sought to shut down Coinseed and stop it from continuing what she called an illegal cryptocurrency trading platform operation.
Coinseed and Davaasambuu were both named as defendants in the suit, along with Sukhbat Lkhagvadorj, the company’s CFO. The defendants defrauded thousands of investors across the U.S. out of more than $1 million, James alleged.
James is looking to stop Coinseed and the two individual defendants from continuing to operate as unregistered commodities broker-dealers via their mobile application, and also return investments of Coinseed’s “worthless” cryptocurrency, the CSD tokens, she said.
The defendants were unlawfully trading cryptocurrencies, like Bitcoin, without being a registered BD in New York, while simultaneously failing to disclose certain fees associated with the trading of virtual currencies on their investors’ behalf, James alleged.