2021-05-11 18:01:28

Crypto Fraudsters Made a Big Bet on Dogecoin, New York Claims

A tiny cryptocurrency trading platform being sued by New York may have illegally sold securities, improperly acted as a broker-dealer and made false and misleading statements about its fees and its management team.

It may even have made its customers some money.

Since February, when New York Attorney General Letitia James sued Coinseed Inc., the operation has sunk all its investors’ funds into Dogecoin, according to a May 6 filing by James. Coinseed “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,” and did it behind its customers’ backs, James said in the filing, on top of her other allegations.

Coinseed didn’t immediately respond to emails seeking comment on the claims.

Here’s the thing: Dogecoin is doing really well.

The Doge Explosion

The cryptocurrency, which started out as an internet joke, has a market capitalization of $61.1 billion, almost 100 times its market cap of $621 million at the beginning of the year, according to CoinMarketCap.com. It’s now the fourth-most-valuable cryptocrrency, after Bitcoin, Ethereum and Binance Coin, and has enjoyed the praise (not to say hype) of the oracular Elon Musk. It’s up almost 70% since mid-April, when James says Coinseed moved its investors’ holdings into the coin.

Photographer: Liesa Johannssen-Koppitz/Bloomberg

So who’s complaining?

James is. Coinseed customers may never see that money again, based on her allegations. The company has “drained both bank and virtual currency accounts that held investor deposits and moved investor assets overseas,” according to the attorney general. She has asked the court to order an end to the alleged acts and to appoint a receiver to recover and protect the funds. It isn’t clear where the money is at this point, and whether it’s still in Doge.

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