SEC's cyber-cops cyber-file cyber-first cyber-fraud cyber-charges

Securities watchdog puts the freeze on dodgy ICO

By Shaun Nichols in San Francisco

Posted in Security, 5th December 2017 00:30 GMT

The SEC's new online crime unit says it has frozen what officials believe to be a fraudulent cryptocurrency.

The US securities watchdog claims Canada-based PlexCorps and its owners, Dominic Lacroix and Sabrina Paradis-Royer, are violating anti-fraud statutes by promising US investors impossible returns on investments in their initial coin offering (ICO) operation.

According to the commission's complaint [PDF], filed in the Eastern New York (Brooklyn) District Court, the PlexCorps ICO had drummed up $15m in investments for their PlexCoin currency promising returns of 1,354 per cent on investment within 30 days.

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.

Rather, they charge, Lacroix was simply planning to pocket the money:

Contrary to these false representations, and as Lacroix knew or recklessly disregarded, PlexCorps and the PlexCoin Token are a scam because: (a) there is no PlexCorps team, other than a handful of Lacroix's employees in Quebec working on the project, and no group of experts working across the globe; (b) the reason that PlexCorps did not disclose the identity of its principal executive—Lacroix—was because Lacroix was a known recidivist securities law violator in Canada; (c) the proceeds from the PlexCoin ICO were not destined for business development but instead were intended to fund Lacroix and Paradis-Royer's expenses including home decor projects; and (d) there was no reasonable basis to project returns on investment in Defendants' scam.

On Monday, a judge granted the SEC's order to freeze the assets of PlexCorps, Lacroix, and Paradis-Royer pending the outcome of the case. The freeze will effectively halt the planned ICO.

The case is the first to be undertaken by the SEC's new Cyber Unit division. The group, founded in September, aims to take action against securities fraud operations that take place entirely online, such as ICO fraud, corporate hacking, and cases of financial misinformation spread through social media.

"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," Cyber Unit chief Robert Cohen said of the suit.

"We acted quickly to protect retail investors from this initial coin offering's false promises." ®

Sign up to our NewsletterGet IT in your inbox daily

7 Comments

More from The Register

Beware Paris Hilton's investment advice, SEC tells investors

Celebrity cryptocurrency endorsements labelled 'potentially unlawful promotion'

Paris Hilton inflates cryptocurrency bubble some more, backs Initial Coin Offering

Meanwhile, China says of ICOs: That's hot, we mean, er, banned

Marvell cooks up 400* Gbps Ethernet chips

*Not a typo. This stuff will make top-of-rack switches sizzle in 2019

Marvell and Cavium do the deed, vow to breed infra-monster

Six billion bucks does the trick, now let's see what kind of kit they build together

Good lord, Kodak's stock is up 120 per cent. How? New film? Oh. It launched a crypto-coin

Sigh, 2018. Sigh

Kodak teases smartphone

Weekend dealbook: Cavium to Marvell, Toshiba denies ASUS

Chipmakers could merge to take on BroadQual, Toshiba says its PCs aren't for sale

Activist investor rages at Mellanox for dismissing Marvell's advances

Analysis Why won't you let us create value for shareholders?

US cops go all Minority Report: Google told to cough up info on anyone near a crime scene

Police cyber-hunt reveals massive gap in legal protections

French activists storm Paris Apple Store over EU tax dispute

Liberté, égalité and a promise of fraternité with management inside a fortnight