The regulator on Monday filed an emergency court order to freeze assets of Dominic Lacroix, and his associated company PlexCorps, for arranging an ICO scheme that fraudulently touted lucrative investment returns.
Where the SEC actions becomes somewhat interesting is in terms of its worldwide implications, with the PlexCoin and it's founder, Dominic Lacroix, described by the SEC as a "recidivist" securities law violator, being based in Quebec, Canada. The Commission's complaint, filed in federal court in Brooklyn, New York, alleges that Lacroix and PlexCorps marketed and sold securities called PlexCoin on the internet to investors in the USA and elsewhere, claiming that investments in PlexCoin would yield a 1,354 percent profit in less than 29 days.
Lacroix and PlexCorps were also charged with violating the requirement to register all securities offerings with the SEC. Lacroix and Royer purportedly sold what the SEC has deemed to be securities in the form of PlexCoin to investors in the U.S. and overseas with claims that backers would see a 1,354 percent profit yield in less than 29 days.
Following the large amount of money raised by the fast-growing ICO sector, the SEC's newly formed Cyber Unit turned its sights on the fraudulent coin once it became apparent it was luring investors with falsities. During an ICO, companies aim to attract investors to back new digital currencies by releasing their own coins or tokens in exchange for cash or Bitcoin.
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The charges are the first filed by the SEC's new cyber unit, created in September to focus on misconduct involving distributed ledger technology, ICOs, the spread of false information through electronic and social media and hacking. The unit utilizes experts within the SEC's Enforcement Division to sniff out any irregularities in the cyber and tech-related fields.
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.
In July, the Quebec Financial Markets Administrative Tribunal issued a series orders prohibiting Lacroix from promoting the sale of PlexCoins ahead of the launch. In addition to charging Lacroix, the Cyber Unit also included his partner, Sabrina Paradis-Royer, in the litigation. The SEC labeled Lacroix a "recidivist securities law violator" running a thinly-veiled scam. "We acted quickly to protect retail investors from this initial coin offering's false promises".
The regulator said this was the first case filed by its brand-new cybersecurity unit, aptly named Cyber Unit.