Just a few weeks ago, changing funds to DOGE would have been a phone call. Now it’s getting rid of people’s savings. This was reported by Decrypt on the 27th (local time).
Customers of the cryptocurrency savings app Coinseed say that the company has converted their deposits to Dogecoin without consent and is not proceeding with the withdrawal process. Powerless and unable to reach the company, users of this New York-registered company have no choice but to watch the Dogecoin market, which slumped by 30% last week, wipe out their savings.
Reddit’s subreddit (bulletin board) r/CoinseedSCAM (Coinseed Scam)’s nickname’Ace201613′ said, “All this made me very sick.” This subreddit was created for angry customers to express their anger and gather power. In the Facebook group of the same name, two customers are losing more than $100,000, and for less, dozens of others are losing. About 50 enraged Facebook users expressed interest in the class action against Coinseed.
In February, the U.S. Securities and Exchange Commission (SEC) and New York City’s Office of the Chief Executive Officer (NYDG) prosecuted the company for tricking investors into buying useless tokens, and lieding about management expertise. NYDG alleged that Coinseed fraudulently took $1 million from investors in the token sale. Since then, Coinseed’s apps are no longer listed on Apple’s or Google’s app stores.
Coinseed’s lawyer also wants to get out of the case. Coinseed’s attorney Morrison Cohen said in a declaration filed last week that Coinseed’s founders did not respond to Coinseed’s communications, delaying the “significant decision” of upcoming events. Morrison Cohen announced on April 21 that he would cut off his relationship with Coinseed. Morrison Cohen’s partner Jason Gottlieb wrote, “It is clear that the relationship between lawyers and clients is irreversibly broken.”
Coinseed’s app allows customers to invest extra money in cryptocurrency. Customers could allocate money to any of the 17 cryptocurrencies or cryptocurrency lending protocols, and Coinseed was supposed to be in charge of the investment. “We are trying to build a bridge for the public to adopt cryptocurrency in the smoothest way,” it said in a previous SEC filing.
It seemed to be a successful model. Several r/CoinseedSCAM subreddit users reported a 10-fold increase in their portfolio. However, if the proceeds are not withdrawn, the balance on their account ultimately has no meaning.
According to the 2019 annual report filed with the SEC, Coinseed had a debt of $92,537 (about 100 million won) by March of that year.
The company was founded in 2017 by two Mongolians studying in New York, CEO Delgerdalai Davaasambu, who wrote the code and held 80% of the company’s stock, and Sukhbat Lkhagvadorj CFO, who handled finances and held the remaining 20%. Coinseed said in SEC data that Lkhagvadorj worked for “a number of Wall Street companies, including fixed income broker-dealers and economic consulting firms focused on securities analysis.”
But New York Attorney General said Lkhagvadorj “has never traded in securities or commodities.”
At this time, the opinions of either of the co-founders were not available. Morrison Cohen, a law firm trying to get out of the case, believes that Davaasambu CEO has returned to Ulaanbaatar, Mongolia. The lawyers said there was no forwarding address.
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Author/ Translator: Jamie Kim
Bio: Jamie Kim is a technology journalist. Raised in Hong Kong and always vocal at heart. She aims to share her expertise with the readers at blockreview.net. Kim is a Bitcoin maximalist who believes with unwavering conviction that Bitcoin is the only cryptocurrency – in fact, currency – worth caring about.