SEC Charges Unicoin Executives Over $100 Million Fraudulent Crypto Offering

The Securities and Exchange Commission (SEC) has charged the crypto project Unicoin and three of its senior executives with orchestrating a fraudulent offering that raised over $100 million from thousands of investors. The complaint names CEO and board chairman Alex Konanykhin, and board chairwoman Silvina Moschini, and former chief investment officer Alex Dominguez. The SEC alleges that these individuals made false and misleading statements in the sales of rights certificates and common stock from February 2022 to the present.

The SEC's complaint details that Unicoin misrepresented its Unicoin tokens as being backed by billions of dollars in real estate holdings, when in reality, these assets were worth only a small fraction of that amount. Investigators also allege that Unicoin falsely claimed to have sold over $3 billion in certificates, when the total proceeds never exceeded $110 million. Additionally, the company falsely portrayed its offerings as SEC-registered.

Unicoin employed extensive promotional efforts, including advertisements in major airports, on New York City taxis, on television, and across social media channels. These campaigns persuaded over 5,000 investors to purchase rights certificates, which were described as safe and profitable "next generation" crypto assets. The SEC asserts that the bulk of these sales were illusory.

The SEC's complaint further alleges that Unicoin and Konanykhin breached federal securities registration rules. Specifically, Konanykhin is accused of selling nearly 38 million of his own certificates at discounted prices, targeting investors the company had previously barred to preserve its registration exemption. The regulator is seeking permanent injunctive relief, disgorgement of ill-gotten gains with prejudgment interest, civil penalties, and officer-and-director bars.

The commission's action also names Richard Devlin, the company’s general counsel. Devlin is accused of negligently repeating similar misstatements in private placement materials. Without admitting or denying the allegations, Devlin consented to a final judgment that imposes permanent injunctive relief and requires him to pay a $37,500 civil penalty.

This enforcement action by the SEC differs from earlier cases against unregistered token sales. Previous actions, such as those against Telegram and Kik, focused on the lack of registration for token distributions. In contrast, the Unicoin case alleges an elaborate marketing scheme built on false promises of real-world collateral, making it a unique and significant case in the SEC's ongoing efforts to regulate the crypto industry.