The U.S. Securities and Exchange Commission (SEC) on Tuesday charged crypto startup Unicoin, Inc. with serious fraud. Several of its top executives also face charges in this significant legal action. They allegedly defrauded thousands of investors through many false claims about crypto offerings. The SEC’s complaint accuses Unicoin and three senior executives of making misleading statements. These statements concerned certificates purportedly giving investors rights to receive new Unicoin tokens. Unicoin was a digital asset the company promoted as the “next generation” of cryptocurrency. It was supposedly backed by various valuable real-world assets according to their initial claims. This New York-based company now faces severe penalties for these alleged fraudulent activities.
An SEC official said Unicoin and executives exploited investors with fictitious promises.
They claimed Unicoin tokens when issued would be backed by many real-world assets. But the SEC alleges these real estate assets were worth a mere fraction. Unicoin promoted its certificates aggressively through extensive advertising campaigns across many media. Advertisements appeared in airports on thousands of New York City taxis and on television. They falsely claimed tokens were backed by billions of dollars in valuable real estate. In reality the company’s assets were never worth more than a small fraction. They also convinced over 5,000 investors the offerings were registered with U.S. authorities. Unicoin falsely claimed to have sold over $3 billion in rights certificates. However the company had actually raised no more than $110 million from investors.
The SEC also alleges CEO Alex Konanykhin unlawfully sold rights certificates himself. He reportedly sold nearly 38 million of these rights certificates to various investors. These sales were often to investors who were barred from the official offering. This action undermined the company’s claimed exemption from federal securities registration requirements. The complaint accuses Unicoin Konanykhin Moschini and Dominguez of antifraud provision violations. Konanykhin and Unicoin also face charges of violating important federal registration provisions. Additionally Unicoin’s general counsel Richard Devlin was also charged in this SEC action. He was charged with negligently making false statements in various official offering documents. Devlin has agreed to settle these charges without admitting or denying any allegations. He will pay a significant $37,500 civil penalty as part of this settlement.
The SEC’s official complaint was filed in the U.S. District Court for New York. Specifically it was filed in the Southern District of New York for these proceedings. The SEC is seeking permanent injunctive relief against Unicoin and its charged executives. It also demands disgorgement of all their ill-gotten gains along with prejudgment interest. Substantial civil penalties are also being pursued by the SEC against these defendants. Furthermore officer-and-director bars are sought for Konanykhin Moschini and also for Alex Dominguez. This significant SEC enforcement action aims to hold them accountable for their alleged misconduct. It clearly highlights the serious risks involved in crypto investment offerings making false claims.
Reference:
