ICO News: US SEC Uncovers Fraudulent ICO That Raised USD 15 Mil
The US SEC has uncovered an alleged fraud in an ICO with ties to its neighbors to the North. The US regulatory body has filed charges against Dominic Lacroix, who the SEC refers to as a “recidivist Quebec securities law violator” and his startup dubbed PlexCorps. Lacroix is charged with defrauding investors in the PlexCorps ICO amid the promise of unrealistic returns. The PlexCorps ICO already raised millions of dollars from unsuspecting investors, and it’s yet another warning to potential participants in upcoming ICOs to perform their due diligence.
The SEC has implemented emergency response, freezing the assets of the PlexCorps, its founder and partner that already raised USD 15 million across thousands of investors, including US-based buyers who apparently believed in the outsized returns. It’s a sign that investors in upcoming ICOs may lack the sophistication that is inherent with traditional funders such as venture capital to decipher which token sales are legitimate.
“This first Cyber Unit case hits all of the characteristics of a full-fledged cyber scam and is exactly the kind of misconduct the unit will be pursuing. We acted quickly to protect retail investors from this initial coin offering’s false promises,” according to the SEC’s Robert Cohen, chief of the SEC’s recently launched cyber unit.
Lacroix and company are being charged with violating anti-fraud and registration provisions of the SEC. Regulators are seeking “permanent injunctions, disgorgement plus interest and penalties,” according to an SEC press release.
PlexCorps ICO Too Good to Be True
The charges against the initial coin offering are the latest evidence that while US regulators have not issued formal regulation, they are monitoring these deals. It’s also proof that the scams that regulators and blockchain enthusiasts alike have warned about in this market do exist.
The SEC isn’t the first regulator to take issue with this deal. Canadian officials have similarly been suspicious of fraud tied to PlexCorps, according to the Financial Times. The red flag to securities regulators was the promise of returns surpassing 1,300 in less than a month for investing in the company’s products. The charges extended to Lacroix’s partner Sabrina Paradis-Royer.
These are the maiden charges to be filed by the SEC’s cyber unit although they’re not the first to be issued by the Wall Street regulator. PlexCorps on its website bills itself as a company that “increases accessibility to cryptocurrency services” with intentions of becoming the “first private crypto-bank.”
