SEC seizes further assets from fraudulent ICO
US financial regulator the Securities and Exchange Commission (SEC) received an order to freeze the assets of Dominic Lacroix this week in an ongoing action to enforce previous securities fraud charges related to his PlexCorps company and its PlexCoin initial coin offering (ICO) in December.
Lacroix was alleged to have used secret bank accounts to dump assets from the ICO that raised up to $15m from thousands of investors, the SEC originally reported in December. The ICO had falsely promised a 13-fold profit in less than a month.
Full-fledged cyber scam
Lacroix, who had previously violated securities laws in Quebec, Canada, was charged with selling PlexCoin securities across the US and the SEC said the case had all the characteristics of a “full-fledged cyber scam”. Lacroix’s partner Sabrina Paradis-Royer was also charged with fraud.
The additional action was ordered so the SEC can collect interest and other penalties related to the PlexCoin ICO – launched in August 2017.
The action highlighted the growing concern over scam ICOs. They look like the real deal, but some make promises of profits that are hard to believe.
“We acted quickly to protect retail investors from this initial coin offering’s false promises,” the SEC said following the initial charges against Lacroix.
SEC ICO advice
Last month, the SEC set up the HoweyCoins ICO promotion page – its own example of a fraudulent offering – to alert investors about what to look out for before investing in an ICO.
“As with any other type of potential investment, if a promoter guarantees returns, if an opportunity sounds too good to be true, or if you are pressured to act quickly, please exercise extreme caution and be aware of the risk that your investment may be lost,” the SEC advised on its page on ICOs.
Risks for retail investors
Nasdaq’s chief executive also weighed in on the ICO theme, telling attendees at the Future of Fintech conference in New York on Wednesday that initial coin offerings posed “serious risks” for retail investors.
Adena Friedman said lack of transparency, regulation and accountability left retail investors at risk of serious fraud.
“To make it no rules at all, when companies can just willy-nilly take people’s money and offer no information at all, with no governance, that sounds to me like you’re taking advantage of people,” she said.
She added that while the SEC requires firms to provide retail investors with the same ICO data as banks and other institutions, the ICO process had “almost no oversight”.
Knives out for ICOs
The knives have been out for ICOs all week. John McAfee, anti-virus magnate and crypto-evangelist, said earlier in the week that he was to stop promoting ICO projects due to rising regulatory “threats” from the SEC.
Meanwhile Chicago Board Options Exchange’s markets president Chris Concannon said the ICO market was about to face a “regulatory reckoning” that would result in a slew of class action lawsuits.