The U.S. Securities and Alternate Fee sued crypto firm Unicoin and three executives on Tuesday evening on fraud expenses, saying the corporate raised over $100 million for tokens that weren’t truly backed by the true property its executives claimed.
The SEC sued Unicoin, CEO Alexander Konanykhin, former board chair Maria Moschini, senior vp and normal counsel Richard Devlin and former chief funding officer and investor relations officer Alejandro Dominguez on securities legislation violations,
Amongst its allegations, the SEC mentioned Unicoin by no means truly owned the true property properties it informed buyers it had acquired, and that these properties’ values had been inflated.
“For instance, between September 2023 and January 2024, the Selling Defendants introduced acquisitions of properties in Argentina, Thailand, Antigua, and the Bahamas, purportedly with appraised values totaling greater than of $1.4 billion; in actual fact, the vast majority of these transactions by no means closed and the precise mixed worth of the 4 properties was not more than $300 million,” the criticism mentioned.
The defendants additionally “overstated the Firm’s gross sales” of its rights certificates, suggesting in social media posts and to buyers that it had raised much more funds than it truly had, the SEC alleged. Whereas Unicoin claimed it had made $3 billion in gross sales by June 2024, it truly by no means bought greater than $110 million in its rights certificates, in accordance with the criticism.
Furthermore, Unicoin marketed its rights certificates, together with by promising outsized returns of as much as 9 million p.c, the SEC alleged, pointing to advertising efforts on taxi cabs, ferries, “workplace constructing elevator screens,” digital billboards, coasters, tv packages, information web sites and public wi-fi kiosks.
“Further examples of the Selling Defendants’ statements embody: (a) social media and web site posts that touted potential returns of 9,000,000% based mostly on bitcoin’s 9,000,000% development up to now 10 years and informed buyers to ‘reap the benefits of the early days of Unicoin and get them at this time,’ highlighting that ‘Bitcoin skilled an incredible rise in worth, reworking early adopters into millionaires, and even billionaires,'” the submitting mentioned.
Learn extra: Unicoin CEO: Why Are We Nonetheless Beneath the SEC’s Gun?
Unicoin obtained a Wells discover from the SEC final December, informing the corporate that the regulator — then underneath the management of former Chair Gary Gensler — supposed to file securities fraud expenses. Final month, Konanykhin despatched a letter to Unicoin’s shareholders, informing them that the corporate had rebuffed the SEC’s try to settle the fees, rejecting what he described as an “ultimatum” to attend a settlement negotiation assembly by April 18.
“We declined to point out up,” Konanykhin informed CoinDesk in an April interview, including that the SEC had made sure pre-meeting calls for he deemed “unacceptable” and claiming that the SEC’s probe had brought on “multi-billion-dollar damages” to the corporate.
Learn extra: Unicoin CEO Reject’s SEC’s Try to Settle Enforcement Probe
Neither Konanykhin nor a spokesperson for Unicoin responded to CoinDesk’s request for remark by press time. In a press launch shared earlier this yr in response to a Wall Avenue Journal article, a spokesperson mentioned, “Unicoin, the one absolutely U.S.-registered, U.S.-regulated, U.S.-audited, and U.S.-publicly reporting cryptocurrency firm, has constantly complied with all rules.”
In keeping with courtroom paperwork, the SEC is looking for disgorgement and civil penalties.
