U.S. regulators have launched parallel actions against crypto trading platform Coinseed. New York Attorney General Letitia James and the U.S. Securities and Exchange Commission have accused the company of operating unlawfully and defrauding investors, with alleged losses exceeding $1 million and affecting thousands of investors.
New York alleges unregistered crypto brokerage activity
According to the New York attorney general’s office, Coinseed Inc. ran an “illegally operating cryptocurrency trading platform” through its mobile app. The lawsuit alleges the company offered trading in digital assets, including bitcoin, without registering as required under securities and commodities laws in New York. It also claims the platform failed to disclose certain fees tied to virtual currency trades executed on behalf of users.
The state’s case names Coinseed Inc., founder and CEO Delgerdalai Davaasambuu, and CFO Sukhbat Lkhagvadorj as defendants. The attorney general is seeking to stop the company and the two executives from continuing to operate as unregistered broker-dealers and to recover investor funds tied to Coinseed’s CSD token.
Token sale also targeted in the case
Regulators further allege that Coinseed financed its business through an unregistered securities offering. The token sale reportedly took place between December 2017 and May 2018, drawing hundreds of investors, including participants in the United States. Authorities say investors were lured by false claims about the management team’s professional experience and roles.
SEC seeks injunctions, disgorgement, and penalties
On the same day as the New York filing, the SEC announced separate charges against Coinseed and its CEO over alleged registration violations related to the offer and sale of digital asset securities. The federal regulator said it is seeking permanent injunctive relief, disgorgement plus prejudgment interest, and civil penalties.
Taken together, the two actions show Coinseed is facing pressure on both state and federal fronts. The case also highlights continued scrutiny by U.S. regulators of unregistered crypto trading activity and token fundraising practices.