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

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

The SEC obtained an emergency asset freeze to stop an initial coin offering fraud, the agency said December 4.

The SEC said in a statement that it had obtained an emergency order to halt the PlexCorps ICO, which had raised up to $15 million from thousands of investors since August by falsely promising a 13-fold profit in less than a month. The PlexCoin ICO had previously been held in contempt of court in Quebec as the provincial regulators had pursued the alleged fraud.

United States regulators appear to be paying more attention to the opaque world of initial coin offerings. Lacroix proceeded with the offering despite being enjoined by Quebec securities regulators and has "misappropriated or attempted to misappropriate at least $200,000 ... on extravagant personal expenditures", the commission said.

In a complaint filed in federal court in Brooklyn, New York, the SEC claimed Dominic Lacroix and his startup PlexCorps have been scamming investors in the USA and around the world with the promise of more than 1,000 percent return on investment in just one month.

The SEC says that Lacroix defrauded investors by hiding his own dubious financial history in Canada and presenting the PlexCoin launch as a means of funding the launch of PlexCorps as a global cryptocurrency operation.

"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", the unit's chief Robert Cohen said in a statement.

The SEC filed charges against a recidivist Quebec securities law violator, Dominic Lacroix, and his company, PlexCorps. In 2013, he and one of his companies pleaded guilty to six counts of "illegal placement, illegal practice, and transmission of false or misleading information" and were fined $25,000 CAD. The SEC also charged Lacroix's partner, Sabrina Paradis-Royer, in connection with the scheme.

The Cyber Unit was created in September with the mandate to investigate crimes related to distributed ledger technology, initial coin offerings, misinformation through social, and electronic media as well as hacking and other threats to trading platforms.

The SEC's complaint charges Lacroix, Paradis-Royer and PlexCorps with violating anti-fraud provisions of the federal securities law, and Lacroix and PlexCorps with violating registration provisions, the SEC said. For Lacroix, the SEC also seeks an officer-and-director ban and, for both Lacroix and Paradis-Royer, a ban from offering digital securities.



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