Today, the US Securities and Exchange Commission issued a press release regarding the IPO of PlexCoin stating that it had obtained an emergency asset freeze with the intention of stopping the ICO (Initial Coin Offering, see below) ‘scam’ that had gained traction extremely quickly. PlexCoin, the currency in question had raised $15 million in a month from a large number of investors. The SEC filed a complaint in a New York federal court stating that Dominic Lacroix, their partner Sabrina Paradis-Royer, and PlexCorps had sold PlexCoin over the internet to a large number of investors, claiming that it would provide a 1354% profit in less than a month. All three have been charged with violating anti-fraud provisions, while Dominic Lacroix and PlexCorps have also been charged with violating the registration provision in US federal securities law. The SEC has stated it also wishes to file permanent injunctions and discouragement with interest against all three, and that it wishes to ban both Dominic and Sabrina from offering digital securities in the future, and Dominic from holding an officer or director position in a public company.
PlexCoin is the first ICO scam punished by SEC, but not the first ICO scam
These are the first charges filed by the SEC’s new cyber unit, and the chief of the unit, Robert Cohen 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”. Other ICO scams in the past include Langpie.
What is an initial coin offering?
Initial Coin Offerings are cryptocurrencies where you can purchase some currency before the coin launches. It is typically used as a form of crowdfunding for cryptocurrencies to get off their feet, for example, ethereum used an ICO in 2014 before its launch in July 2015. ICOs are also used as a scam, as it does not require much other than a website and some false promises – So long as you can get exposure and you make the right promises, there is quite a bit of (illegal) profit to be made