The New York attorney general has reportedly won its case against cryptocurrency investment platform, Coinseed, regarding illegal operations and violation of the state’s Martin Act. Following the New York State Supreme Court’s judgment, the crypto platform has been ordered to halt its operations and pay about $3 million in relief for the affected users.
Coinseed Ordered to Halt Operation
The NY attorney general Letitia James reportedly sued the crypto investment platform in February. James alleged that the company and the founder, Delgerdalai Davaasambuu, violated the New York Martin Art by trading cryptocurrencies without properly identifying with the authorities as a broker-dealer, which is required under the state’s law.
Without the customers’ consent, Coinseed allegedly “moved every investor’s holdings into one single, extremely volatile virtual currency (named Dogecoin), which rises and falls dramatically in price in a matter of hours on any given day.” Per the attorney general, the company failed to respond to the complaint and further defied the preliminary injunction.
The New York State Supreme Court Justice, Andrew Borrok, recently awarded the case to the attorney general, which will see Coinseed “permanently halt their illegal and fraudulent operations.”
Coinseed to Pay $3 Million in Relief
According to the report, a permanent receiver will be appointed to take over the website and also oversee investors’ funds. Both the company and founder were ordered to pay about $3 million in relief to the investors.
In addition to that, the court barred the company and founder from directly or indirectly operating as a dealer, broker, issuer, or advisor for any product related to security or commodity trading, including virtual currencies or digital token in the state. They must not write or offer advice on buying or selling a security or commodity.
The New York attorney general has been active in protecting investors from deceptive and fraudulent virtual asset offerings. Months ago, she warned investors to maintain “extreme caution” when investing in cryptocurrencies.