Executives of Unicoin Charged with fraud in Securities and Exchange Commission Allegations
The United States Securities and Exchange Commission (SEC) has filed charges against crypto investment platform Unicoin and several top executives, alleging a fraud scheme involving false promises and misleading claims. The SEC claims that Unicoin and its executives raised only $110 million, much less than the $3 billion the company claimed to have amassed through its rights certificate offerings.
Deceptive Investment Scheme
As detailed in a complaint filed in the Southern District of New York, the SEC accused CEO and Chairman Alex Konanykhin, former president and board chairwoman Silvina Moschini, former Chief Investment Officer Alex Dominguez, and general counsel Richard Devlin of orchestrating or facilitating deceptive promotional campaigns that led over 5,000 individuals to purchase rights certificates. These certificates were marketed as a means to access "asset-backed" Unicoin tokens, with promotional materials suggesting secure and profitable investments linked to crypto assets allegedly backed by substantial real estate and equity holdings.
However, the SEC argues that Unicoin's actual holdings represented only a small fraction of the claimed worth.
Mark Cave, Associate Director in the SEC's Division of Enforcement, stated, "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."
False Regulatory Compliance Claims
The SEC also took issue with Unicoin's claims of regulatory compliance, stating they were false. The securities agency further alleges that Konanykhin personally sold nearly 38 million rights certificates, some of which were sold to investors that Unicoin had initially excluded to maintain a registration exemption, violating securities laws governing unregistered offerings. All four individuals are charged with antifraud violations, with Unicoin and Konanykhin also facing charges related to unregistered securities sales.
The SEC is seeking permanent injunctions, civil penalties, and disgorgement of ill-gotten gains, as well as prohibiting the three executives from serving as officers or directors of public companies. Devlin, the company's general counsel, has agreed to settle the charges without admitting or denying the allegations, paying a $37,500 civil penalty for negligently making misleading statements in private placement documents.
Konanykhin claimed the SEC informed Unicoin in December of planned fraud charges, which he vehemently refuted in an April 3 Miami Herald opinion piece.
The case serves as a significant reminder of the potential for fraudulent schemes in the cryptocurrency market, exploiting investors with false promises of asset-backed tokens. The need for regulatory oversight to protect investors from such misleading opportunities becomes even more apparent in light of the accusations against Unicoin.
- The SEC's allegations against Unicoin and its executives extend beyond fraudulent investment schemes, as they also claim false regulatory compliance assertions were made, potentially impacting the general-news and business sectors.
- In addition to the SEC's charges related to the deceptive investment scheme, Unicoin and CEO Alex Konanykhin are also facing accusations of crime-and-justice implications stemming from unregistered securities sales, highlighting the complexity and potential legal dangers associated with crypto finance.
