In February, we reported that both the U.S. Securities and Exchange Commission and the New York Attorney General had brought proceeding against Coinseed, a company that purported to offer a mobile investment application that enabled users to invest in digital assets. On May 7, 2021, the AG’s office filed a motion asking the court for a temporary restraining order, a preliminary injunction, and the appointment of a receiver to immediately block Coinseed and its CEO from making any further unauthorized trades and safeguarding investors’ monies.
The AG issued a statement saying, “in the months since we filed our suit, the greed perpetrated by Coinseed and its CEO has not only continued, but grown. This company has continued to operate illegally — holding investors’ funds hostage and conducting unauthorized trades in investors’ portfolios, while depleting accounts and transferring virtual currency to an offshore, unregulated trading platform.”
The motion is replete with complaints about Coinseed. Among the alleged wrongdoing is that Coinseed converted client’s holdings into Dogecoin without any authority. As an example: “On April 18, 2021, an investor informed OAG that over the course of three years he had invested $9,420 into virtual currency through the Coinseed application. On April 16, 2021, his portfolio of bitcoin, ether and Digibyte had grown his account balance to around $45,000. However, according to the investor, on the evening of April 16, 2021, without his permission, Coinseed converted all his holdings to Dogecoin, and the ability to sell or trade currencies were disabled too, leaving the application essentially not functional.” Others complained that they were unable to withdraw funds. Requests were met with the following pop-up: “Withdrawls have been disable temporary” (sic).
Authorities regularly warn the public about the risks in operating in the cryptocurrency space but many obviously continue not to heed those warnings.