Evaluating only Coinseed’s profile at its peak — without knowing the outcome — the model ranked Regulation as the #1 likely cause. Documented cause: Fraud.
Key Events Timeline
FOUNDING
Coinseed launched as a micro-investing app allowing users to round up purchases and invest spare change in crypto.
FUNDING
Raised approximately $2.1 million in seed funding and grew to tens of thousands of users.
REGULATORY ACTION
New York AG filed suit alleging founders converted $1M in user funds to Dogecoin without consent and charged hidden fees.
SHUTDOWN
Coinseed ceased operations after court losses; users unable to recover funds; founders faced ongoing legal proceedings.
Full Analysis
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Documented cause
Coinseed, a New York-based micro-investing crypto app, was sued by the New York Attorney General in February 2021 for fraud. The NYAG alleged that founders Delgerdalai Davaasambuu and Sukhbat Lkhagvadorj converted $1 million in user funds into the Doge token without consent, charged undisclosed fees, and blocked withdrawals. The company shut down in 2022 after losing the legal battle and facing multiple regulatory actions.
Lesson
“Any platform that controls user keys can unilaterally misappropriate funds; non-custodial models protect users.”