The U.S. Securities and Exchange Commission (SEC) has filed a lawsuit against cryptocurrency company Unicoin Inc. and several of its executives, accusing them of defrauding investors out of more than $100 million through misleading and unregistered securities offerings.

SEC Alleges Investor Fraud Through Misleading Claims

According to the complaint filed in the Southern District of New York, the SEC alleges that Unicoin, along with its CEO Alex Konanykhin, board member Maria Silvina Moschini, and former chief investment officer Alex Dominguez, misled investors while promoting “rights certificates.” These certificates were tied to a future token named Unicoin and marketed as asset-backed instruments supposedly linked to a multi-billion-dollar real estate and pre-IPO equity portfolio.

However, the SEC claims that the assets backing Unicoin were significantly overvalued, worth only a fraction of what was advertised. Of the real estate deals showcased in Unicoin’s promotional materials—spanning properties in Argentina, Thailand, and the Caribbean—many transactions never closed. The combined value of these assets was estimated at no more than $300 million.

Disputed Fundraising Claims

Unicoin also claimed to have raised over $3 billion from investors globally. Yet, the SEC alleges that actual sales totaled approximately $110 million, gathered from more than 5,000 investors worldwide. This discrepancy further fueled concerns about the company’s transparency and credibility.

Unregistered Securities Offerings

The SEC argues that Unicoin falsely promoted its offerings as SEC-compliant or “U.S. registered.” In reality, the certificates were neither officially registered nor exempt under federal securities laws. This misrepresentation, according to regulators, constitutes a violation of investor protection standards.

Additional Violations and Airdrops

Another major point in the SEC’s case involves Unicoin’s distribution of tokens via airdrops without verifying investor accreditation. This action, the agency claims, represents another breach of securities regulations. Furthermore, the SEC alleges that CEO Alex Konanykhin sold nearly 38 million certificates to investors who had previously been excluded to maintain the company’s legal compliance.

Legal Action Against Executives

Unicoin’s general counsel, Richard Devlin, was also charged for his role in the scheme. However, Devlin has settled with the SEC, agreeing to pay a $37,500 fine and accepting a permanent injunction without admitting wrongdoing. The SEC is now seeking civil penalties, the disgorgement of funds, and executive bans against the other defendants.

“The SEC’s actions have caused significant harm to our company and blocked critical fundraising opportunities,” said CEO Konanykhin, who has denied the charges and vowed to contest them in court.

SEC Continues Crypto Enforcement

Despite a shift toward more crypto-friendly policies in recent years, the SEC remains committed to enforcing regulations and pursuing cases it views as involving clear fraud. This lawsuit highlights the agency’s stance on protecting investors and ensuring accountability in the cryptocurrency sector.

For investors interested in cryptocurrencies, this case serves as a reminder to conduct thorough due diligence before engaging in token offerings or other investment opportunities. Consider the following tips to safeguard your investments:

  • Verify regulatory compliance: Ensure that any securities offerings are properly registered with relevant authorities.
  • Evaluate asset backing: Check the legitimacy and valuation of any assets claimed to back the investment.
  • Research the company: Investigate the company’s history, leadership, and prior dealings to assess credibility.
  • Be cautious with airdrops: Avoid participating in token distributions unless proper accreditation verification processes are in place.

As the cryptocurrency market continues to grow, staying informed and vigilant is key to making smart investment decisions. Always prioritize transparency and regulatory compliance when considering opportunities in this evolving financial landscape.

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