SEC Files Lawsuit Against Crypto Firm Unicoin

The United States Securities and Exchange Commission (SEC) has launched a significant legal action against Unicoin, a cryptocurrency investment firm based in New York, along with three of its top executives. The SEC accuses them of misleading investors and orchestrating a fraud scheme amounting to over $100 million.

Details of the Lawsuit

On a recent Tuesday, the SEC announced that it filed a lawsuit in the U.S. District Court for the Southern District of New York. The defendants in this case include Unicoin, its CEO and Board Chairman Alex Konanykhin, former president Silvina Moschini, and former Chief Information Officer Alex Dominguez. The defendants are charged with making deceptive statements related to the Unicoin token and the company’s common stock offerings, thereby violating federal securities laws.

Additional Charges and Allegations

Furthermore, the SEC has charged Konanykhin and Unicoin with breaching the registration requirements of the Securities Act of 1933. Konanykhin is also accused as a control person for certain antifraud violations of the company. Richard Devlin, the general counsel for Unicoin, faces allegations of misleading investors through false statements in private placement memorandums used to market rights certificates and Unicoin common stock.

Misleading Investment Promises

According to Mark Cave, Associate Director of the SEC’s Division of Enforcement, Unicoin and its executives misled thousands of investors with false promises that their tokens would be backed by significant real-world assets, including a valuable international real estate portfolio. However, the actual value of these real estate assets was only a fraction of what the company claimed, and a large portion of the rights certificates sold were non-existent. The senior executives of Unicoin are alleged to have been instrumental in perpetuating this fraud, and the SEC’s action seeks to hold them accountable.

Unicoin Prepares to Contest Allegations

The SEC’s complaint asserts that since February 2022, Unicoin and Konanykhin have been involved in unregistered sales of rights certificates. Konanykhin reportedly sold over 37.9 million rights certificates, allegedly to offer better pricing and target investors excluded from the offering to maintain the company’s registration exemption.

Investor Misrepresentation

The executives are accused of enticing over 5,000 investors into purchasing rights certificates through deceptive statements that portrayed these as secure, stable, and profitable next-generation crypto assets. Claims that the tokens had accumulated over $3 billion in rights certificates sales were misleading, with actual figures closer to $110 million.

Misleading Registration Claims

The SEC also alleges that the company falsely asserted that its rights certificates and Unicoin tokens were “SEC-registered” or “US-registered.” Extensive marketing efforts were made to promote these certificates, including advertisements in prominent locations such as major airports, New York taxis, television, and social media platforms.

Legal Repercussions

The SEC is seeking permanent injunctive relief, the return of ill-gotten gains with interest, and civil penalties against the defendants. The complaint also calls for officer-and-director bars against Konanykhin, Moschini, and Dominguez.

Unicoin’s Response

In an interview with crypto journalist Eleanor Terret, Unicoin’s CEO indicated that the company intends to challenge the SEC’s allegations in court. Following the SEC’s complaint, Konanykhin expressed regret over the regulatory body’s actions and described the charges as unfounded, arguing that Unicoin is the most compliant cryptocurrency firm in the nation.

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