emfizz.com December 14, 2017

SEC halts initial coin offering, calling it fraud

06 December 2017, 01:17 | Patty Hardy

SEC Cyber Unit's first charges target cryptocurrency fraud

SEC's Cyber Unit files first charges against digital coin scam

The SEC said investors have purchased about 81 million PlexCoin tokens for about $15 million since the ICO was launched in June. The first thing on its agenda was likely always going to be initial coin offerings-a form of nearly totally unregulated investment vehicle in which investors trade things of real value, like cash, in exchange for stakes in cryptocurrency-backed startups.

Lacroix had previously been held in contempt of the Quebec Supreme Court following discovery that, according to the Autorité des marchés financiers (AMF), he had ignored that court's previous orders and continued to solicit investors to engage in PlexCoin-related crowdfunding. In its latest Facebook post, Friday, it told "dear members" how PlexCoin was up 698.03 per cent at 73 cents on CoinMarketCap as far and away the top gainer.

Using Facebook, the company sold securities called PlexCoin - which its Web site billed as "the next cryptocurrency" - to investors in the U.S. and elsewhere, raising US$15 million since August, and promising a return of 1,354 percent within 29 days, the SEC said in a statement. The SEC said this summer that ICOs could fall under United States securities rules, and among other things, it claims PlexCorps failed to comply with the relevant registration laws.

The SEC's Cyber Unit was created in September to focus on misconduct involving blockchain and ICOs, the spread of false information through electronic and social media, hacking and threats to trading platforms. In addition, both Lacroix and PlexCorps have been charged with violating the U.S. federal securities laws' registration provision.

In addition to the fraud charges, the SEC also put out an emergency asset order, which calls for the movement of the $15 million funds generated by the ICO into different accounts.

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The charges are the first by the SEC's new cyber unit. Lacroix's partner Sabrina Paradis-Royer was also charged.

The SEC is seeking a permanent injunction, a judgement ordering the defendants to disgorge the profits with interest and to pay financial penalties, the agency said.

The SEC filed charges against a recidivist Quebec securities law violator, Dominic Lacroix, and his company, PlexCorps.

The Brooklyn situation "is exactly the kind of misconduct the (SEC cyber unit) unit will be pursuing", said a statement from Robert Cohen, chief of the SEC's Cyber Unit.

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