New York Attorney General Letitia James on Sept. 13 shut down virtual currency trading platform Coinseed Inc.

The state attorney general secured a court order against the company and its founder and CEO Delgerdalai Davaasambuu, alleging the parties were engaged in "illegal and fraudulent operations," according to a release published on the attorney general's website.

Since James filed this lawsuit, the Office of the Attorney General received more than 175 complaints from investors who were concerned about protecting their assets due to Coinseed's fraudulent conduct.

The court further put in place a permanent receiver to obtain, safeguard and return all assets invested and traded through Coinseed and take control of the trading platform website. The court also ordered a $3.1 million judgment against the defendants.

In February, Attorney General James had sued Coinseed, its CEO and CFO Sukhbat Lkhagvadorj for allegedly defrauding thousands of investors out of more than $1 million, trading digital assets without registering as a broker/dealer and failing to disclose certain fees tied to trading virtual currencies.

According to James, in the months since the suit was filed, Coinseed and its CEO continued their fraud and commenced additional fraudulent conduct by trading in investors accounts without permission and blocking them from accessing those accounts.

In June, the New York County State Supreme Court granted James' motion for a preliminary injunction and the appointment of a temporary, court-appointed receiver with special powers to safeguard investments already made on the trading platform. Nevertheless, Coinseed and its CEO defied the preliminary injunction by creating, offering and selling a new virtual currency and failed to respond to the complaint.

"In defiance of court orders, this company has continued to operate illegally and unethically, holding investors' funds hostage and underscoring the dangers of investing in unregistered virtual currencies," said Attorney General James.