The U.S. Securities and Exchange Commission (SEC) has launched a major legal action against cryptocurrency startup Unicoin and three of its top executives, accusing them of orchestrating a complex fraud scheme that mislead thousands of investors. The lawsuit alleges that the company and its leaders made false and misleading statements about the value of their tokens, which were supposed to be backed by real-world assets including real estate and equity interests in pre-IPO companies. These claims were significantly exaggerated, as the actual value of the assets was only a fraction of what Unicoin promised. The SEC’s complaint outlines how Unicoin engaged in extensive marketing efforts, including advertisements in airports, taxis, and on television and social media, to deceive investors into purchasing the tokens for substantial sums.
According to the SEC’s complaint, the company raised over $100 million from more than 5,000 investors through misleading statements that portrayed the tokens as investments in safe and profitable ‘next-generation’ cryptocurrencies. The allegations include false claims that the company had sold over $3 billion in rights certificates, when it actually raised no more than $110 million. Additionally, Unicoin and its executives are alleged to have falsely represented that the tokens and rights certificates were ‘SEC-registered’ or ‘U.S. registered’ when they were not. The SEC also alleges that the company and one of its executives, Konanykhin, violated federal securities laws by offering and selling unregistered rights certificates.
Konanykhin, who is accused of engaging in deceptive practices to secure better pricing and target investors the company had previously prohibited from participating, is the most senior executive implicated in the case. The SEC’s lawsuit seeks to hold these individuals accountable for their alleged role in misleading investors about the value of their investments. The lawsuit represents a significant enforcement action by the SEC against the growing cryptocurrency market, emphasizing the need for regulatory oversight and transparency. This case highlights the risks associated with investing in cryptocurrencies and the potential for fraudulent schemes to deceive unsuspecting investors.