With cryptocurrency growing more prevalent in the mainstream, the SEC is taking action to regulate ICOs as securities. On June 18, 2018, the SEC received a court order to freeze the assets of the PlexCoin founders under allegations of false marketing and fraudulent activity.
Wild West of ICOs Coming to an End
Reported by Crowdfund Insider on June 20, the SEC received an emergency court order to freeze the assets of PlexCorps founders, Dominic Lacroix and Sabrina Paradis-Royer, as part of an ongoing enforcement action initiated in December 2017.
According to the initial report, the original court order to freeze the assets of Lacroix and Paradis-Royer was received in December 2017 and unsealed on June 18.
It is alleged that Lacroix used fake accounts, including that of his brother’s, to liquidate investor funds for personal use received in the PlexCoin ICO.
Both Lacroix and Paradis-Royer are being charged with violating anti-fraud provisions regarding the PlexCoin ICO and will be receiving penalties for false marketing and fraudulent activity.
According to the initial press release by the SEC:
“The complaint seeks permanent injunctions, disgorgement plus interest and penalties. For Lacroix, the SEC also seeks an officer-and-director bar and a bar from offering digital securities against Lacroix and Paradis-Royer.”
PlexCorps raised nearly $15 million from thousands of investors through their PlexCoin ICO, which untruthfully claimed the coin would yield a 1,354% profit in under 29 days.
SEC Cyber Unit Taking Action
Formed in September 2017, the SEC Cyber Unit pursued the PlexCoin ICO misconduct as their first case since inception and made clear that such activity would not be tolerated.
In the December 2017 press release, Chief of SEC Cyber Unit Robert Cohen states:
“This first Cyber Unit case hits all of the characteristics of a full-fledged cyber scam and is exactly the kind of misconduct the unit will be pursuing. We acted quickly to protect retail investors from this initial coin offering’s false promises.”
In the press release, the SEC dubbed PlexCorps founder, Dominic Lacroix “a recidivist Quebec securities law violator” and revealed that they were working with the Office of International Affairs and Quebec’s Autorité Des Marchés Financiers to uncover the full extent of the PlexCoin ICO fraud.
As cryptocurrency grows more prevalent, it’s becoming clear that regulatory bodies are finally catching on to the global impact and influence of initial coin offerings, distributed ledger technology, and cryptocurrency exchanges on retail investors still new to the scene.
Cover Photo by Anders Jildén on Unsplash