Unicoin Faces Securities Fraud Lawsuit for $100 Million Alleged Investor Scam
In a significant move, the Securities and Exchange Commission (SEC) has filed a lawsuit against Unicoin, alleging fraudulent securities offerings. The case centres around claims that the company and its top executives, including Konanykhin, Moschini, and Dominguez, misled over 5,000 investors into purchasing "rights certificates."
These certificates were promoted as asset-backed and SEC-registered securities, but the SEC asserts that these claims were inflated and deceptive. Unicoin misled investors by selling certificates as entitlements to crypto tokens without proper backing or registration, concealing the true nature and risks involved.
The SEC's complaint highlights the widespread promotion strategy, with false and misleading statements distributed through multiple channels, including speaking engagements, investor meetings, ads in public spaces, TV, social media, and crypto conferences.
The SEC is seeking permanent injunctions, disgorgement of ill-gotten gains, prejudgment interest, civil penalties, and officer-and-director bars against the company executives involved. The SEC also charged Unicoin's general counsel, Richard Devlin, for his role in the scheme, but did not charge Devlin with the SEC registration of the certificates.
The case underscores the SEC's ongoing enforcement efforts against crypto-related fraud that resembles traditional securities fraud but is wrapped in a digital asset facade. The widespread promotion strategy across diverse public and private venues underscores the deliberate effort to create a deceptive appearance of legitimacy.
Key details of the deception include the misleading financial information presented to investors, with evidence that Unicoin's statements deliberately concealed the true nature and risks involved with these certificate offerings. The SEC states that Unicoin publicly claimed to have sold more than $3 billion in rights certificates, but the real total was only $110 million.
Unicoin labeled its tokens and certificates as SEC-registered, which they were not. The company's real estate portfolio was minimal, and it had less than a year of financial runway, sometimes just four months.
The outcome of this case could impact how future crypto-based offerings are marketed to U.S. investors. It serves as a reminder for companies to ensure transparency and accuracy in their securities offerings, particularly in the rapidly evolving crypto market.
- In light of the SEC's lawsuit against Unicoin for fraudulent securities offerings, the business and finance sector, including crypto-related ventures, should be more cautious about the accuracy and transparency of their general-news announcements to avoid similar allegations of deception and inflated claims.
- The SEC's ongoing enforcement efforts against crypto-related fraud like the one perpetrated by Unicoin serve as a crucial reminder to crime-and-justice authorities about the need to monitor digital assets, as traditional securities fraud tends to adapt its methods within the evolving crypto market.
