On Tuesday, the United States Securities and Exchange Commission (SEC) charged New York City-based digital asset firm Unicoin and three of its top executives with defrauding 5,000 investors in a $110 million scam.
In its complaint, filed with U.S. District Court for the Southern District of New York, the SEC alleged that Unicoin, Inc., its CEO and Board Chairman Alex Konanykhin, former President and current Board Member Silvina Moschini, and former Chief Investment Officer Alex Dominguez violated the antifraud provisions of the federal securities laws.
According to the regulator, the defendants made “false and misleading statements in an offering of certificates that purportedly conveyed rights to receive crypto assets called Unicoin tokens and an offering of Unicoin, Inc.’s common stock.”
Konanykhin and Unicoin were also charged with violating the registration provisions of the Securities Act, and Konanykhin as a control person for certain of Unicoin’s antifraud violations.
Unicoin was founded in 2022 as an asset-backed token tied to equity in emerging growth companies. It was promoted as a regulated, transparent alternative to volatile digital assets, with the company claiming to stand out as “a next-generation company uniquely aligned with U.S. standards, backed by real estate and equity stakes in high-growth potential companies.”
Amongst other things, Unicoin and its executives are alleged to have convinced more than 5,000 investors to purchase rights certificates through false and misleading statements—including across advertisements in major airports, on thousands of New York City taxis, and television and social media—that portrayed them as investments in safe, stable, and profitable “next generation” digital assets.
The false claims included 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, when in fact Unicoin’s assets were never worth more than a small fraction of that amount, according to the SEC.
Other false claims highlighted by the regulator were that the company had sold more than $3 billion in rights certificates, when it raised no more than $110 million, and that the rights certificates and Unicoin tokens were “SEC-registered” or “U.S. registered” when they were not.
“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,” Cave added.
According to the SEC complaint, Unicoin and Konanykhin also violated the federal securities laws by engaging in unregistered offers and sales of rights certificates. Konanykhin allegedly 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 to avoid jeopardizing its exemption to registration requirements.”
The regulator seeks “permanent injunctive relief, disgorgement of ill-gotten gains with prejudgment interest, and civil penalties” against Unicoin, Konanykhin, Moschini, and Dominguez, as well as an order preventing Konanykhin, Moschini, and Dominguez from serving as officers or directors of public companies in the future.
The SEC also charged 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 that Unicoin used to offer and sell rights certificates and Unicoin stock.
However, Devlin settled and consented to a final judgment providing permanent injunctive relief and a civil penalty of $37,500 without admitting or denying the SEC’s allegations.
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Source: https://coingeek.com/sec-charges-unicoin-in-110-million-fraud/