SEC halts ICO Scam as threats grow

The Securities and Exchange Commission obtained an emergency asset freeze on Monday to halt an initial coin offering or ICO fraud after falsely promising a 13-fold profit in less than a month.

The SEC filed charges against Dominic Lacroix and his company, PlexCorps. The Commission filed the complaint in federal court in Brooklyn, New York alleges that Lacroix and PlexCorps marketed and sold securities called PlexCoin that has raised nearly $15 million since August. PlexCorps told investors that the PlexCoin would yield a 1,354 percent profit in less than a month.

The SEC’s complaint also states that Lacroix and his company violated laws by failing to register the offering and not disclosing its past security probe involvements with Canadian authorities. Based on filing, the SEC obtained an order to freeze the assets of PlexCorps, Lacroix, and Sabrina Paradis-Royer, who is also allegedly involved in the scheme.

The SEC seeks fines as well as an officer-and-director bar and a bar from participating in digital security offerings

The files were charged by the SEC’s new Cyber Unit. The unit was created was back in September to focus on cyber-related crimes, including ICO scams.

"This first Cyber Unit case hits all of the characteristics of a full-fledged cyber scam and is exactly the kind of misconduct the unit will be pursuing," said Robert Cohen, Chief of the Cyber Unit. "We acted quickly to protect retail investors from this initial coin offering's false promises."

PlexCorp highlights the amount of ICO schemes and how it can be exploited by to receive upwards of millions of dollars in investments for cryptocurrency startups. Those exploiting the scheme simply see it as a “get rich quick” plan, while investors may see it as a promising investment return.

The SEC previously released a statement in August warning investors about potential ICO scams. The Commission warns investors that these schemes can lure investors promising large investment returns, but end up in a penny-stock like pump and dump.

The Commission says that investors should be cautious foregoing into ICOs. It states that investors should do their research prior and be alert for red flags that raise suspicion. Suspicions can be the lack of information of the company, lack of answers to questions, “non-reporting” companies, and past history of the directors and company.

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