The SEC is cracking down on ICO fraud. (Image: Getty Images/iStockphoto)
The US Securities and Exchange Commission on Tuesday announced that its new cyber unit filed charges alleging initial coin offering (ICO) fraud. A company called PlexCorps raised up to $15 million from thousands of investors since August by falsely promising a 13-fold profit in less than a month, the complaint filed in a federal court in New York alleges.
The SEC charges said PlexCorps marketed and sold securities called PlexCoin since August, and claimed investments in PlexCoin would yield a 1,354 percent profit in less than 29 days.
Virtual coins or tokens are created and shared using distributed ledger or blockchain technology, and these can be sold in an ICO. Businesses, developers, and individuals are using ICOs to raise capital, and often turn to social media and other marketing avenues to gain interest.
“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,” Robert Cohen, chief of the cyber unit, said in a statement. “We acted quickly to protect retail investors from this initial coin offering’s false promises.”
The complaint alleges Dominic Lacroix and Sabrina Paradis-Royer were behind the fraud. It charges Lacroix, Paradis-Royer and PlexCorps with violating the anti-fraud provisions, and Lacroix and PlexCorps with violating the registration provision, of the US federal securities laws.
We have reached out to PlexCorps for comment.
The new Cyber Unit was launched by the SEC in September to focus on problems like ICO fraud, “misconduct” on the dark web, hacks aimed at stealing nonpublic information, intrusions into retail brokerage accounts, market manipulation schemes involving “false information spread through electronic and social media,” and cyber threats to market infrastructure like trading platform.
The SEC warned investors about ICOs in August: “Fraudsters often try to use the lure of new and emerging technologies to convince potential victims to invest their money in scams.”PREVIOUS AND RELATED COVERAGE
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