The Securities and Exchange Commission (SEC) has charged New York City-based Unicoin Inc., a cryptocurrency company, with making false and misleading statements in an offering of certificates that purportedly conveyed rights to receive crypto assets called Unicoin tokens and an offering of the company’s common stock.
According to the SEC, Unicoin lured more than 5,000 investors to purchase rights certificates through false and misleading statements regarding the safety and profitability of its tokens. These included claims that the Unicoin tokens underlying the rights certificates were “asset-backed” by billions of dollars of real estate and equity interests in pre-IPO companies – the SEC determined Unicoin’s assets were never worth more than a small fraction of that amount. The company also claimed it sold more than $3 billion in rights certificates – it only raised $110 million – and it made false statements that the rights certificates and Unicoin tokens were “SEC-registered” or “US registered.”
The charges also include Unicoin CEO and Board Chairman Alex Konanykhin, former President and Board Chairwoman Silvina Moschini, and former Chief Investment Officer Alex Dominguez.
“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,” said Mark Cave, associate director in the SEC’s Division of Enforcement. “But as we allege, the real estate assets were worth a mere fraction of what the company claimed, and the majority of the company’s sales of rights certificates were illusory. Unicoin’s most senior executives are alleged to have perpetuated the fraud, and today’s action seeks accountability for their conduct.”
The SEC’s complaint, filed in the US District Court for the Southern District of New York, charged the company and its executives with violating the antifraud provisions of the federal securities laws, Konanykhin and Unicoin with violating the registration provisions of the Securities Act of 1933, and Konanykhin as a control person for certain of Unicoin’s antifraud violations. The complaint seeks permanent injunctive relief, disgorgement of ill-gotten gains with prejudgment interest, civil penalties and officer-and-director bars against the executives.
The complaint also charges Unicoin’s general counsel, Richard Devlin, with violating the antifraud provisions of the federal securities laws by negligently making similar misstatements in private placement memoranda Unicoin used to offer and sell rights certificates and Unicoin common stock. Without admitting or denying the SEC’s allegations, Devlin has consented to the entry of a final judgment providing permanent injunctive relief and ordering him to pay a $37,500 civil penalty.
