Unicoin Hit With SEC Charges Over $100M Fraud Scheme

The US Securities and Exchange Commission (SEC) has charged New York-based Unicoin and three top executives with defrauding investors through misleading and untrue statements.

The SEC’s complaint details how the Company attracted over 5,000 investors through aggressive marketing campaigns. At the same time, it made fraudulent claims about the token’s asset-backing and regulatory status.

US SEC Alleges Massive Misrepresentation of Assets and Sales Figures

The SEC’s complaint mentions a pattern of deception by Unicoin and its executives regarding the company’s assets and sales performance.

As per the filing, the company falsely claimed that Unicoin tokens were “asset-backed” by billions of dollars in real estate and equity interests in pre-IPO companies.

However, in reality, the project was “never worth more than a small fraction of that amount.” Mark Cave, Associate Director in the SEC’s Division of Enforcement said,

“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.”

Additionally, the complaint stated that the project grossly inflated its sales figures. It claimed to have sold over $3 billion in rights certificates while actually raising no more than $110 million. The SEC also alleges that Unicoin misrepresented the regulatory status of its offerings.

They were also accused of falsely marketing the rights certificates and tokens as “SEC-registered” or “U.S. registered”. In reality, they had not received such approval.

These misrepresentations were allegedly spread through extensive promotional efforts, including advertisements in major airports, thousands of New York City taxis, and across television and social media platforms.

Unicoin Executives Charged With Securities Violations

The SEC’s charges target not only Unicoin as a company but also specifically name three top executives: CEO and Board Chairman Alex Konanykhin, former president Silvina Moschini, and former Chief Investment Officer Alex Dominguez. All three are accused of violating antifraud provisions of federal securities laws.

Konanykhin faces additional charges related to unregistered securities offerings. According to the complaint, he

“…offered and sold over 37.9 million of his rights certificates to offer better pricing and target investors the company had prohibited from participating in the offering.”

This action was allegedly taken to avoid jeopardizing Unicoin’s exemption from registration requirements.

The SEC filing also names Richard Devlin, Unicoin’s general counsel. Allegedly, he made similar misleading statements in private placement memoranda used to offer and sell rights certificates and company stock.

Unlike the other executives, Devlin has already agreed to settle with the SEC without admitting or denying the allegations. They also consented to permanent injunctive relief and a $37,500 civil penalty.

The complaint seeks severe penalties against the remaining defendants. This includes permanent injunctive relief, disgorgement of ill-gotten gains with prejudgment interest, civil penalties, and officer-and-director bars against Konanykhin, Moschini, and Dominguez. These would prohibit them from serving in leadership positions at public companies.

Unicoin Rejected Settlement Talks After the December Wells Notice

Unicoin’s legal troubles with the SEC began before the formal charges were announced. According to reporting by former FOX Business journalist Eleanor Terrett, the company received a Wells notice from the SEC in December regarding a token airdrop.

A Wells notice typically indicates that the SEC staff has made a preliminary determination to recommend enforcement action against the recipient.

Following this notice, the regulatory body invited Unicoin to attend settlement negotiations scheduled for April 18. However, CEO Alex Konanykhin reportedly declined the meeting. They told Terrett that “some of the regulator’s requests for the meeting were unacceptable,” stating that the company would instead “fight the case in court.”

This decision to reject settlement talks came approximately three weeks before the SEC formally filed its complaint in the U.S. District Court for the Southern District of New York. The charges now facing the company and its executives are considerably broader than the token airdrop issue mentioned in the Wells notice.