The U.S. Securities and Change Fee sued crypto firm Unicoin and three executives on Tuesday night time on fraud costs, saying the corporate raised over $100 million for tokens that weren’t really backed by the true property its executives claimed.
The SEC sued Unicoin, CEO Alexander Konanykhin, former board chair Maria Moschini, senior vp and normal counsel Richard Devlin and former chief funding officer and investor relations officer Alejandro Dominguez on securities legislation violations,
Amongst its allegations, the SEC stated Unicoin by no means really owned the true property properties it advised buyers it had acquired, and that these properties’ values have been inflated.
“For instance, between September 2023 and January 2024, the Selling Defendants introduced acquisitions of properties in Argentina, Thailand, Antigua, and the Bahamas, purportedly with appraised values totaling greater than of $1.4 billion; in reality, nearly all of these transactions by no means closed and the precise mixed worth of the 4 properties was not more than $300 million,” the criticism stated.
The defendants additionally “overstated the Firm’s gross sales” of its rights certificates, suggesting in social media posts and to buyers that it had raised way more funds than it really had, the SEC alleged. Whereas Unicoin claimed it had made $3 billion in gross sales by June 2024, it really by no means offered greater than $110 million in its rights certificates, in keeping with the criticism.
Furthermore, Unicoin marketed its rights certificates, together with by promising outsized returns of as much as 9 million %, the SEC alleged, pointing to advertising efforts on taxi cabs, ferries, “workplace constructing elevator screens,” digital billboards, coasters, tv applications, information web sites and public wi-fi kiosks.
“Further examples of the Selling Defendants’ statements embrace: (a) social media and web site posts that touted potential returns of 9,000,000% based mostly on bitcoin’s 9,000,000% development prior to now 10 years and advised buyers to ‘reap the benefits of the early days of Unicoin and get them in the present day,’ highlighting that ‘Bitcoin skilled an incredible rise in worth, remodeling early adopters into millionaires, and even billionaires,'” the submitting stated.
Learn extra: Unicoin CEO: Why Are We Nonetheless Below the SEC’s Gun?
Unicoin obtained a Wells discover from the SEC final December, informing the corporate that the regulator — then underneath the management of former Chair Gary Gensler — supposed to file securities fraud costs. Final month, Konanykhin despatched a letter to Unicoin’s shareholders, informing them that the corporate had rebuffed the SEC’s try to settle the fees, rejecting what he described as an “ultimatum” to attend a settlement negotiation assembly by April 18.
“We declined to point out up,” Konanykhin advised CoinDesk in an April interview, including that the SEC had made sure pre-meeting calls for he deemed “unacceptable” and claiming that the SEC’s probe had triggered “multi-billion-dollar damages” to the corporate.
Learn extra: Unicoin CEO Reject’s SEC’s Try and Settle Enforcement Probe
Neither Konanykhin nor a spokesperson for Unicoin responded to CoinDesk’s request for remark by press time. In a press launch shared earlier this 12 months in response to a Wall Road Journal article, a spokesperson stated, “Unicoin, the one absolutely U.S.-registered, U.S.-regulated, U.S.-audited, and U.S.-publicly reporting cryptocurrency firm, has constantly complied with all rules.”
Based on court docket paperwork, the SEC is looking for disgorgement and civil penalties.