SEC Sues Unicoin Executives Over $37.9 Million Fraud

The U.S. Securities and Exchange Commission (SEC) has taken legal action against Unicoin, a New York-based company, and three of its executives, including CEO Alex Konanykhin. The lawsuit, filed on May 21, alleges that the defendants engaged in deceptive practices related to the sale of equity certificates and common stock linked to Unicoin. These certificates were marketed as granting rights to a future cryptocurrency asset, attracting investors through extensive marketing efforts across various platforms, including television and social media.

The SEC's complaint states that over 5,000 investors were misled into purchasing these certificates. The regulatory body claims that Konanykhin sold more than 37.9 million of his own certificates illegally, bypassing regulatory safeguards. The lawsuit emphasizes the significance of adhering to securities laws within the cryptocurrency sector, as the SEC seeks substantial penalties, including injunctions, against the defendants to deter future violations.

The SEC's investigation revealed that Unicoin made false claims about the backing of its tokens, asserting that they were supported by billions of dollars in real estate and pre-IPO company equity. In reality, the actual asset value was significantly lower than what was advertised. The company also exaggerated the sale of rights certificates, claiming over $3 billion in sales, while the actual fundraising did not exceed $110 million. Additionally, Unicoin falsely represented its securities as "SEC registered" or "U.S. registered," further misleading investors.

The SEC has filed multiple charges against CEO Alex Konanykhin, Silvina Moschini, and former Chief Investment Officer Alex Dominguez. The regulatory body is seeking permanent injunctions, disgorgement of illegal gains, and civil penalties against these individuals. The company's legal counsel, Richard Devlin, has agreed to pay a $37,500 fine as part of the settlement.

This legal action underscores the SEC's dedication to safeguarding investors from fraudulent activities in the cryptocurrency and securities markets. The case highlights the importance of transparency and accurate disclosure in financial transactions, particularly in the rapidly evolving digital asset space. The outcome of this lawsuit is expected to set a precedent for future regulatory actions against similar fraudulent practices.