New SEC Cyber Unit shuts down PlexCorps ICO offering

A brand new unit of the Securities and Exchange Commission(SEC) has shutdown an initial coin offering scam. This is the first case filed by the new Cyber Unit, created in September to focus on nefarious activity in the world of cryptocurrencies.

As in other countries, U.S. regulators appear to be taking more interest in the opaque and unregulated world of initial coin offerings (ICOs). Both China and South Korea have already banned ICOs.

The PlexCorps case

The SEC Cyber Unit halted the operation of PlexCorps for falsely promising over 1,000 percent in returns. Along with his firm Dominic Lacroix faced charges. Lacroix's partner Sabrina Paradis-Royer was also charged. The firm had been soliciting $15 million from investors. In some cases ICO offerings have not disclosed proper information to investors.

The Commission filed its complaint in federal court in Brooklyn New York. The complaint alleges that Lacroix and PlexCorps marketed and sold securities called PlexCoin on the Internet both in the U.S. and elsewhere with the claim that the investment would yield 1,354 percent profit in less than 29 days according to the regulator.

The SEC's complaint charges Lacroix, Paradis-Royer and PlexCorps with violating anti-fraud provisions of the federal securities law, and Lacroix and PlexCorps with violating registration provisions, the SEC said.

The charge seeks "permanent injunctions, disgorgement plus interest and penalties" The SEC is also seeking to disbar Lacroix and Paradis-Royer from being an officer or director and from offering digital securities.

The purpose of the new Cyber Unit

The Cyber Unit is designed to sniff out illegal and nefarious activity within the ICO and general crypto coin area. The cryptocurrency market in the US is watching closely to see how regulators respond to ICOs.

SEC chair Jay Clayton claims that ICO's closely resemble new company initial public offerings IPOs implying that they should be regulated just as tightly as IPOs.

Other measures being taken to regulate cryptocurrency

The UK and EU are planning a crackdown on cryptocurrency trading amid fears it is being used for illegal activities.

The Internal Revenue Service (IRS) in the U.S. is also demanding information on users of bitcoin to ensure that they are paying the proper taxes on their earnings.

The new SEC Cyber Unit is described on the appended video.

Published previously in Digital Journal