Order to Shut Down Crypto Trading App Coinseed Issued by New York’s Highest Court
Coinseed, a cryptocurrency trading platform accused of covertly converting customers’ funds into the meme coin Dogecoin without disclosure, has been ordered to permanently cease operations.
According to a Bloomberg report, the shutdown order follows a lawsuit filed by New York Attorney General Letitia James against the founders of the troubled exchange for fraud.
The central allegation against Coinseed alleges that the platform secretly converted client balances into DOGE, the meme-inspired cryptocurrency that drew massive retail attention after endorsements from high-profile figures like Tesla CEO Elon Musk.
Attorney General James initiated the case against Coinseed in February and obtained a court order instructing the platform to stop all business activities. Despite the order, the platform reportedly continued operating and its operators then froze customer withdrawals.
Worse still, the company is accused of deleting certain customer accounts, prompting additional complaints as the legal proceedings continued.
“A judge ruled in favor of our lawsuit to shut down the Coinseed crypto trading app and appointed a permanent receiver to protect investors’ funds. Coinseed can no longer continue its fraudulent and illegal conduct that bilked investors out of millions,” James said via the official NYAG Twitter account.
Attorneys reported filing more than 100 complaints against the exchange, with most victims saying they lost thousands of dollars in recent months. In total, the exchange allegedly defrauded customers of more than $1 million in digital assets and deposits.
In addition to the cessation order, the Coinseed team was ordered to pay $3 million in fines.
The exchange also faced a lawsuit from the U.S. Securities and Exchange Commission for illegal activity and misleading investors.