The Securities and Exchange Commission (SEC) has initiated legal proceedings against Unicoin, along with four high-ranking executives, citing allegations of misleading over 5,000 investors and raising more than USD 100 million (approximately AUD 155 million) through what it describes as deceptive sales of cryptocurrency-linked certificates.
In a complaint filed on May 20 in Manhattan federal court, the SEC accused Unicoin’s CEO Alex Konanykhin, board member Silvina Moschini, former investment officer Alex Dominguez, and general counsel Richard Devlin of misrepresenting critical elements of their offerings, including the company’s financial status and the backing of its proposed token.
According to the SEC, Unicoin began promoting rights certificates associated with a future token back in 2022, claiming these tokens would be supported by a diversified real estate portfolio. However, the SEC asserts that this portfolio either did not exist or was significantly overvalued.
The company allegedly claimed to have sold rights worth USD 3 billion (AUD 4.67 billion), yet actual filings indicated that the amount raised was only slightly more than USD 100 million (AUD 155 million). This scenario draws parallels to the infamous OneCoin scandal, which ended disastrously for many investors.
Furthermore, the SEC contends that Unicoin misled investors regarding the regulatory status of its products, falsely implying that they were registered with appropriate authorities when they were not.
Despite the gravity of the situation, Unicoin has yet to issue a formal response to the lawsuit. Reports indicate that the company was served a Wells notice in December but opted against negotiating a settlement with the SEC. CEO Konanykhin described the SEC’s conditions as “unacceptable” and confirmed the company’s intention to contest the charges in court.
Konanykhin has also indicated that following the firm’s decision to reject the settlement, the SEC issued new subpoenas to employees and associates of Unicoin, which he characterised as a retaliatory action.
As the case unfolds, it draws much attention amidst growing scrutiny of cryptocurrency investments and regulatory frameworks, making it essential for investors to stay informed and cautious in their engagements with similar enterprises.
The Unicoin situation highlights the critical importance of regulatory oversight in the rapidly evolving crypto space, serving as a stark reminder to potential investors about the need to conduct thorough due diligence before participating in such ventures.
