US SEC Cyber Unit Files First Complaint Against Fraudulent ICO

The newly established Cyber Unit under the SEC filed their very first complaint against a fraudulent Canadian ICO which raised a total of $15 million from investors

The United States’ Securities and Exchange Commission (SEC) announced earlier this week that their new division, the Cyber Unit, filed their very first complaint against a fraudulent initial coin offering (ICO). The Canada-based ICO has so far raised $15 million from their investors after launching their campaign in August earlier this year. However, they falsely claimed that investors could expect a 13-fold return on investment within the first month.

According to the SEC, this is the very first complaint handled by their brand new Cyber Unit, and its very establishment could point to a new era when it comes to regulators’ awareness of possible cryptocurrency-based fraud.

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The Cyber Unit was established just a little more than two months ago and was already involved in a previous fraudulent ICO scam. This ICO involved the firm Plex Corps and its owner, the Canadian Dominic Lacroix. The regulator has officially charged Lacroix of offering investors a fraudulent token by claiming that the token is capable of a 1,354% profit in less than a month.

During the investigation, the SEC and its Cyber Unit successfully froze all assets linked to both Plex Corps and Lacroix.

According to a Quebec regulator, Lacroix was found in contempt of court during his trial in October earlier this year. This was shortly after the Canadian Autorité des marchés financiers filed an application. Also, a Tribunal during the summer pronounced Lacroix guilty of violating SEC laws.

However, Twitter judge Lacroix perhaps even more harshly than any court. While Twitter was ablaze with unflattering statements regarding Lacroix’s ICO campaign, several experts were satisfied with a mere “I told you so.” One legal expert, in particular, the attorney, Stephen Palley, boasted that he warned users about the Plex Corps ICO before it was found to be fraudulent.

Despite this, the SEC and other government agencies continued on their self-congratulatory quest shortly after the ICO was filed. According to Robert Cohen, chief of the new Cyber Unit, the Plex Corps ICO demonstrated all characteristics present in fraudulent campaigns, and Cohen emphasized that the Cyber Unit will be targeting any other fraudulent campaign that emerges in the future. Cohen added that the Cyber Unit aims to protect all potential investors from being misled by deceptive ICO promises.

The Cyber Unit was established in September this year. According to the agency, it strives to address any practices of misconduct relating to blockchain technology, ICOs, fraudulent claims made through social media, as well as security threats and hacks pertaining to exchange platforms. This is a notably broad area, and considering that cryptocurrency is becoming more and more lucrative, the Cyber Unit might have their work cut out for them.

The Cyber Unit officially charged Lacroix with violating the SEC’s anti-fraud policies as well as violating the registration provision as outlined in the US federal securities laws. If convicted, Lacroix could be facing a hefty fine plus interest, as well as being banned from the industry for the rest of his lifetime.

Plex Corps advertised Plex Coin as a cryptocurrency that was based on Ethereum. According to its website, Plex Coin sought to enhance the coin’s utility by creating a more convenient method of managing cryptocurrency and by appealing to a broader user base.

Also, Plex Coin was said to offer users quicker transactions times than compared to Bitcoin, as well as more storage capabilities.

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