The New York state attorney general Letitia James has recently declared fraud against cryptocurrency startup Coinseed. The reason for these charges is that The New York state attorney general believes that Coinseed utilized the sale of a seemingly worthless token in order to rob various companies out of their money and assets, with losses going well over $1 million.
Coinseed Under Fire As Tensions Rise
Not only do many law authorities still view cryptocurrency as volatile and untested, but Coinseed itself was suspected of raising over $100,000 through the sale of over 200,000 of their ‘worthless’ tokens. The reason for this allegation is that the tokens themselves seem to have little to no functionality in the company’s mobile application, which is made available for use.
Moreover, these tokens were thus not actually needed in order to utilize the trading platform, and they are also not required in order to manage or operate anyone’s account. Tensions were further escalated when it was discovered that Coinseed conducted its trade of tokens without being registered as a broker-dealer first.
SEC Filed A Lawsuit Against Coinseed
Not only does attorney general Letitia James desire to stop Coinseed in its tracks and prevent any further fraudulent activities, but the U.S. Securities and Exchange Commission had also recently filed an official lawsuit against the company. In addition to charges of fraud and theft, the documents in the lawsuit also claim that a member of Coinseed is guilty of misrepresenting himself as a Wall Street trader when in reality, he has no experience related to commodity or trade security.
In a case mirroring that of the SEC’s case against Ripple Labs, it is becoming abundantly clear that lawsuits surrounding fraudulent initial coin offerings may be little more than securities and might not actually hold up in the court of law unless they can be reinforced thoroughly.
Ultimately, time will tell what will happen to Coinseed, but it is certain that cryptocurrency-related activities are under heavy supervision, and it will be difficult to conduct digital business and online trading through this platform in the near future.
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