Another First: SEC Filed Emergency Order to Freeze Assets of Fraudulent ICO
US Securities and Exchange Commission freezes assets of PlexCoin’s issuers, calls the ICO both a securities offering and a scam.
The US Securities and Exchange Commission (SEC) today proved how serious they are about prosecuting scam ICOs by filing an emergency asset freeze against PlexCorps. Owners Dominic Lacroix and Sabrina Paradis-Royer were also targeted the by order. The SEC describes Lacroix as “recidivist Quebec securities law violator.”
According to a press release from the SEC, PlexCorps engaged in an ICO this past August which promised investors in PlexCoin a 1,354 percent return in just 29 days. The ICO raised about $15 mln from “thousands of investors.” The SEC is seeking significant penalties:
“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.”
Also a security
The SEC directly referred to PlexCoin as a security, saying:
“Lacroix and PlexCorps marketed and sold securities called PlexCoin on the internet to investors in the US and elsewhere.”
“The SEC’s complaint 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.”
SEC’s Cyber Unit
Cointelegraph previously reported on the SEC’s creation of a Cyber Unit to combat ICO frauds. These are the first charges filed by the new unit. Robert Cohen, head of the Cyber Unit, stated:
"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."
It’s no surprise that the SEC is taking such things seriously. This summer, the Commission ruled that infamous Ethereum-based “TheDAO” sale was actually a securities offering, though they declined to press charges.
ICOs really are the “Wild West” of financial markets, where erstwhile securities issuers hide behind disclaimers and play fast-and-loose with the rules. There have been allegations of insiders gaining undue advantages and even outright accusations of scams, but this is the first formal action the SEC has taken against an ICOs issuers.