SEC Sues Unicoin, Accusing the New York-Based Company and Its Executives of Securities Fraud

The US Securities and Exchange Commission (SEC) has filed a lawsuit against Unicoin, a New York-based company, and four of its executives

The US Securities and Exchange Commission (SEC) has sued New York-based company Unicoin and four of its executives for allegedly defrauding thousands of investors during a major fundraising effort with a cryptocurrency token.

The lawsuit, filed in the Southern District of New York, also names CEO Alex Konanykhin, Director Silvina Moschini, former CIO Alex Dominguez, and General Counsel Richard Devlin.

The SEC's complaint claims that Unicoin's leadership misrepresented the value and security of so-called “equity certificates,” which were promoted as future rights to a cryptocurrency token called Unicoin.

Unicoin allegedly engaged in an aggressive public marketing campaign that included TV ads, social media posts, airport billboards, and taxi advertisements throughout New York City to encourage investors to purchase the certificates.

These efforts reportedly convinced over 5,000 investors to invest in the certificates based on inflated claims about Unicoin's assets, technology, and planned operations.

Key Among the SEC's Allegations Are:

Unicoin allegedly presented a snapshot of its balance sheet as of December 31, 2021, reporting total assets of about $6 billion and liabilities of about $1 billion. However, the SEC claims these figures were "grossly inflated."

According to the SEC, Unicoin's own internal projections showed a net loss of $1.2 billion for 2021, yet it allegedly told investors it had a $2 billion net income for that year.

Unicoin allegedly marketed its token as having advanced development and being close to launch. Still, the SEC claims the company faced significant technical hurdles and had yet to develop a working version of the token.

Unicoin allegedly claimed it planned to launch its token in the first quarter of 2023. However, the company later postponed the launch to the second quarter and ultimately failed to launch the token at all, according to the SEC.

Unicoin allegedly touted its token as being compliant with US securities laws and stated that the certificates would be exchangeable for the tokens upon launch. However, the SEC claims the company had no plans or ability to ensure the tokens'operability or register them for public offering.

Unicoin's certificates were sold only to US investors, and the company's actions allegedly violated Section 5 of the Securities Act, rendering the certificates unlawful.

Additionally, Konanykhin is accused of personally selling over 37.9 million certificates at a discounted rate to ineligible investors in a private placement offering that required registration with the SEC, which was not done.

The SEC is also seeking to hold him liable as a “control person” for the company's fraudulent actions.

The lawsuit seeks permanent injunctions,ю repayment of ill-gotten gains with interest, civil penalties, and bans preventing the executives from serving as officers or directors of public companies.

Devlin, the general counsel, has agreed to settle with the SEC, paying a $37,500 civil penalty without admitting or denying the allegations.

“We allege that Unicoin and its executives exploited investors with fictitious promises backed by vastly overstated assets,” said Mark Cave, Associate Director of the SEC’s Division of Enforcement. “This action aims to hold those responsible accountable.”

The SEC's investigation and legal proceedings are ongoing.

Separately, the US government has urged a federal judge to impose a two-year prison sentence on Eric Council Jr., who played a role in spreading false information about the approval of a spot Bitcoin ETF by the SEC via its official X account.

In a filing on Wednesday, the government alleged that Council had posted a fraudulent message on X in January 2024, falsely claiming that the SEC had authorized the first-ever spot Bitcoin ETF.