Crypto exchanges across the globe are viewed as entities set up to serve their customers by protecting funds and serving them well. Coupled with that, they should be able to help their customers mitigate losses when need be. In a rather serious charge against a particular crypto exchange, Coinseed, the district attorney of New York, has sued them to court.
According to the file, the crypto exchange was in the know and allowed its investors to fall prey to a scam investment which saw them lose a cumulative total of about $1 million. The file also mentioned that Coinseed used its native token that it hosted on an ICO back in 2017 to carry out the malicious act.
Attorney General accuses the exchange of fraud
Further details into the file showed that the ICO in 2017 saw Coinseed raise close to $100,000 from the sale of 200,000 units of its native coin, CSD. In the attorney general’s words, the coins had zero functionality, and the trading platform of Coinseed worked efficiently without the coins in question, unlike what they claimed. The state that broke the Camel’s back was a new revelation that Coinseed was not officially licensed to operate as a broker-dealer when the ICO was carried out in 2017.
In the Attorney General’s office statement, it noted that the AG is presently pushing for the suspension of Coinseed and two other people from carrying out their operations as broker-dealer for the time being. It also said that their mobile application would be removed from all downloadable websites coupled with the suspension, and the persons in question would return the investments that the investors made for the native tokens, CSD. After the Attorney General’s lawsuit, the Securities and Exchange Commission has also announced that it is filing the same lawsuit against the crypto exchange in the coming days.
Crypto-related lawsuits are on the rise
The court documents also accused Coinseed of violating the Martin Act, which serves as an anti-fraud law act that governs New York only. The documents also mentioned that, coming with the fact that they gave investors false information about their coins, the coins in question were also unregistered securities. Notably, the Attorney General also has a case against crypto exchange Bitfinex and stablecoin company, Tether, and has also involved the act against both of them.
Two executives of Coinseed are also being charged with different crimes along with the lawsuit filed against Coinseed. The documents against the first defendant, the CFO of Coinseed, Sukhbat Lkhagvadorj, claimed that he was a Wall Street certified trader. Investigations revealed that neither has he been to Wall Street or is a certified trader in securities.
Lawsuits against securities are joe the order of the day after the latest one involving Ripple and SEC. While the SEC is still standing on their claims that XRP is a security, the remittance coin company says it is a digital asset. With the lawsuit still very much in the books, major crypto exchanges and investments are steering clear of it.