SEC files charges in digital currency investment scam

Capitalizing on spying tools believed to have been developed by the U.S. National Security Agency hackers staged a cyber assault with a self-sprea

Capitalizing on spying tools believed to have been developed by the U.S. National Security Agency hackers staged a cyber assault with a self-sprea

The U.S. Securities and Exchange Commission said on Monday its newly created cyber unit had filed its first charges against an "initial coin offering" (ICO), alleging that a privately held company called PlexCorps and its top two officials had defrauded investors.

The Securities and Exchange Commission's (SEC)'s new Cyber Unit set up in September to, among other things, regulate ICOs, initiated action against PlexCoin, which promised investors over 13x return within a month.

According to the press release, the SEC filed the charges in a federal court in NY where it "alleges that Lacroix and PlexCorps marketed and sold securities called PlexCoin on the internet to investors in the US and elsewhere, claiming that investments in PlexCoin would yield a 1,354 percent profit in less than 29 days".

Zaslavskiy and Lacroix appear to be capitalizing on the newfound interest around bitcoin and other digital currencies, which have captured public attention by reaching record values in recent months.

The government agency also charged company founders Dominic Lacroix and Sabrina Paradis-Royer for their part in the sale and announced it had frozen company assets in an effort to halt this "fast-moving Initial Coin Offering (ICO) fraud".

The SEC said investors have purchased about 81 million PlexCoin tokens for about $15 million since the ICO was launched in June. The charges are the result of regulatory collaboration with the Autorité Des Marchés Financiers (AMF). As for why Lacroix kept his identity hidden, it wasn't fear of competition but the fact that he known recidivist securities law violator in Canada. For Lacroix, the SEC also seeks an officer-and-director bar and a bar from offering digital securities against Lacroix and Paradis-Royer. In October, Quebec's Superior Court declared the company and Lacroix in contempt of court, finding the defendants continued to market and solicit investments in PlexCorps.

The PlexCoin saga is not Lacroix's first run-in with North American regulators.

The regulator said this was the first case filed by its brand-new cybersecurity unit, aptly named Cyber Unit. Lacroix was further fined $25,000 by the Court of Quebec for illegal distribution, illegal practice and misrepresentations. From a quick glance, it does not seem to provide any differentiating reason why anyone should invest in their ICO, but promises were seemingly made that token amounts would just increase as well as suggestions of 1,000% profits.

Featured image from Shutterstock.

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