The Securities and Exchange Commission has frozen the assets of a cryptocurrency startup accused of fraudulently selling up to $15 million in tokens. Yesterday, the SEC announced charges against PlexCorps, an embattled initial coin offering (ICO) company that advertises an ostensibly stable and approachable cryptocurrency called PlexCoin. The complaint alleges that PlexCorps promised massive returns it was unlikely to deliver, while advertising a nonexistent team of experts and obscuring the past financial crimes of its founder Dominic Lacroix.
PlexCorps has already run afoul of Canadian regulators, who ordered it to stop soliciting investment for PlexCoin; Lacroix himself was previously banned from dealing in securities after allegedly defrauding investors in a micro-loan venture. The SEC said this summer that ICOs could fall under US securities rules, and among other things, it claims PlexCorps failed to comply with the relevant registration laws.
More damningly, it also says that PlexCorps enticed investors with “outlandish rewards” of a 1,354 percent profit over the course of under a month. Lacroix and his partner Sabrina Paradis-Royer allegedly misappropriated over $200,000 of the investments for “extravagant personal expenditures.” And the SEC complains that PlexCorps flouted Canadian regulators’ rulings — while selling “a t-shirt with a picture of a man making an offensive gesture” at the name and logo of Quebec’s financial oversight body.
PlexCorps disputed the accusations on Facebook. “We are being depicted as robbers, scammers and fraudsters everywhere in the media. They are smearing our name with some allegations that can sometimes be false or misleading,” it said. “We claim that PlexCoin is not a fraud since no one had their money stolen from us and once more, all purchased PlexCoin were distributed.” The company says it will cooperate with US and Canadian regulators, but “what is now being published in the media goes too far.”
The SEC says that these are the first charges filed by its Cyber Unit, which was created in September to fight online scams and other criminal activity. PlexCoin isn’t the only allegedly scammy ICO it’s gone after, however. This fall, it charged two companies, which claimed to be selling ICO tokens backed by real estate and diamond investments, with fraud.