Crypto platform Coinseed has been accused of switching users' funds to Dogecoin without their authorization.
Around 50 people plan to file a class action lawsuit against the company, Decrypt reports.
Members of the Reddit thread r/CoinseedSCAM claim that Coinseed converted funds to Dogecoin without their consent. In addition, users in a Facebook group also claim to have suffered large losses due to the company's actions and claim that some of the app's features were unavailable.
The New York State Attorney's Office (NYAG) charged the platform as well as its executive team back in February with defrauding investors of more than $1 million. The US Securities and Exchange Commission (SEC) has also filed a lawsuit against Coinseed.
According to the authorities, one of Coinseed's founders posed as a former Wall Street trader, but had never actually worked in the stock market. The company was also not registered as a broker.
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Jason Gottlieb, a partner of Coinseed's lawyer Morrison Cohen, has announced the law firm will not defend the interests of the company. The company's lawyers believe the platform's leaders have left the US. Gottlieb noted:
"It is clear that the attorney-client relationship has broken down irreparably."
Coinseed offered users the possibility to invest in digital assets through a mobile app.