While the U.S. Securities and Exchange Commission (SEC) has recently reversed course in several high-profile enforcement cases in the crypto sector, it is now alleging that a New York-based crypto firm, Unicoin Inc., and several top executives duped investors.
The SEC charged the company — along with its chair and CEO, Alex Konanykhin; its former chair and president, Silvina Moschini; and its former chief investment officer, Alex Dominguez — for allegedly misleading investors in an offering of certificates that claimed to represent rights to crypto assets (Unicoin tokens), and an offering of the company’s common stock, which collectively raised more than US$100 million from investors.
None of the allegations have been proven.
According to the SEC’s complaint, starting in early 2022, the defendants allegedly “engaged in a massive securities offering fraud” that included falsely claiming that the Unicoin tokens were “next generation” cryptoassets that would be backed by a billion-dollar portfolio of real estate assets and holdings of private equities.
The certificates that were sold to investors were offered as securities, the SEC said, and it charged that the company massively overstated the sales of those certificates on social media and in other communications to investors to create “the illusion of robust investor interest.”
It also alleged that they misrepresented the company’s financial condition to investors.
“We allege that Unicoin and its executives exploited thousands of investors with fictitious promises that its tokens, when issued, would be backed by real-world assets including an international portfolio of valuable real estate holdings,” said Mark Cave, associate director in the SEC’s enforcement division.
“But as we allege, the real estate assets were worth a mere fraction of what the company claimed, and the majority of the company’s sales of rights certificates were illusory,” he said.
The SEC charged the company and its executives with violating anti-fraud provisions of federal securities laws and registration requirements. The regulator’s complaint seeks permanent injunctive relief, disgorgement with prejudgment interest, and civil penalties.
The SEC also settled allegations against Unicoin’s general counsel, who was charged with violations by making misleading statements in private placement offering documents.
Without admitting or denying the SEC’s allegations, he consented to a final judgment that included permanent injunctive relief and a US$37,500 civil penalty.