SEC reaches settlement with PlexCoin over ICO fraud

Maria Nikolova

The settlement includes the imposition of fines on the individuals behind PlexCorps and orders that they pay disgorgement of $4.56 million.

There has been some development in the action taken by the United States Securities and Exchange Commission (SEC) against fraudulent scheme PlexCorps, aka PlexCoin, and the individuals behind it. According to documents filed with the New York Eastern District Court on August 9, 2019, the SEC says that the parties in the case have reached a settlement.

The documents filed with the Court include the signed consents of the individual defendants in this case – Dominique Lacroix, Sabrina Paradis-Royer, and PlexCorps a/k/a and d/b/a PlexCoin and Sidepay.ca, and a proposed final judgment against the defendants.

The SEC requests that the Court enter the proposed final judgment.

Let’s recall that, in December 2017, the SEC launched an emergency action, and obtained temporary restraining orders, to stop the defendants’ dissemination of a series of material false and misleading statements, and misappropriation of investor assets, in connection with the illegal offering through an initial coin offering (ICO) for unregistered securities known as PlexCoins.

The SEC charged Lacroix and PlexCorps with raising approximately $15 million through the unregistered sale of PlexCoins. The SEC also charged Lacroix and PlexCorps with falsely telling investors, among other things, that they were keeping the identity of the individuals behind PlexCorps secret to avoid poaching, and that investors could expect “enormous” and “real” returns from investing in PlexCoin of upwards of 1,300%. The regulator also alleged that Paradis-Royer participated in the scheme to defraud PlexCoin investors while aiding and abetting Lacroix’s and PlexCorps’ violations.

The SEC later filed an amended complaint further alleging that Lacroix and PlexCorps had lied about the amounts raised during the PlexCoin ICO, which was approximately $8.3 million, and not the $13 million Defendants had alleged. The amended complaint further alleged that the defendants had misappropriated at least $600,000 of investor proceeds for lavish personal expenses.

The SEC alleges that the defendants violated Section 10(b) of the Securities Exchange Act of 1934 and Rule 10b-5 thereunder, and Section 17(a) of the Securities Act of 1933, and that Lacroix and PlexCorps violated Sections 5(a) and 5(c) of the Securities Act.

Without admitting or denying the allegations in the SEC’s pleadings, the defendants have agreed to settle the claims against them by consenting to a final judgment that would:

  • permanently enjoin them from future violations of Section 10(b) of the Exchange Act and Rule 10b-5, and Section 17(a) of the Securities Act, and permanently enjoin Lacroix and PlexCorps from future violations of Sections 5(a) and 5(c) of the Securities Act;
  • order that Defendants pay disgorgement and prejudgment interest in the amount of $4,563,468.62 and $348,145.25;
  • order that the Individual Defendants pay civil penalties of $1 million, each;
  • order that Lacroix be permanently barred from acting as an officer or director of a public company;
  • order that the Individual Defendants be barred from participating in any offering of digital securities;
  • pursuant to Section 308(a) of the Sarbanes-Oxley Act of 2002, create a Fair Fund so that collected civil penalties can be combined with collected disgorgement and prejudgment interest for distribution to victims (the “PlexCorps Fair Fund”);
  • orders that asset custodians transfer the U.S. Frozen Assets to the Commission for distribution to investors; and
  • orders that Defendants not oppose any action by the SEC to enforce or collect upon the final judgment against any assets belonging to Defendants, including assets frozen by orders of Canadian tribunals with respect to this matter.

The centerpiece of the proposed final judgments are three orders that, together, would begin the process of permitting the distribution of certain funds obtained from PlexCoin ICO victims. These orders are the order establishing the PlexCorps Fair Fund, the order directing the turnover of the U.S. Frozen Assets to the SEC, and the order that the defendants cooperate in collection actions against certain frozen assets, including in Canada.

The SEC notes that the proposed settlement is fair and reasonable and will serve the public interest.

Read this next

Technology

BankiFi raises $4.8m to bring embedded banking platform to North America

“Our mission is to make all aspects of cash management and payments easier for SMBs everywhere, and this investment is another huge step to making that a reality.”

Executive Moves

Shieldpay hires ex-Payoneer Chris Andrews as Head of Sales

“We’ll be expanding our position in existing markets and accelerating growth into new verticals, whilst building on our direct and indirect channels.”

Digital Assets

Crypto.com secures preliminary approval to operate in Canada

Crypto.com, one of the longest-established crypto platforms, has become the first digital asset platform to sign a Pre-‘Registration Undertaking’ with the Ontario Securities Commission (OSC) in Canada.

Retail FX

CySEC hits IC Markets One with regulatory warning

The Cyprus Securities and Exchange Commission has once again stepped up its fight against unauthorized brokers.

Uncategorized

XTAGE now offers bitcoin and ether trading to 3.6M Brazilian investors

Brazilian financial services giant XP has officially launched its crypto trading platform XTAGE, which was built on major American stock exchange Nasdaq’s trading technology.

Institutional FX

FX volume drops 7pct at CLS Group in July 2022

FX settlement specialist CLS Group today reported that the executed volumes of currency trading on its platforms were notably down in July.

Digital Assets

Web3 startup PIP integrates with Binance ecosystem

Web3 payment provider PIP has announced integration with the Binance ecosystem, which allows the firm to vastly develop and propose needed products and improvements that are worthy of competing with others chains.

Industry News

Celsius $750m insurance claims are fraud, says lawyer seeking EU crypto superfund

“It is an intentional deception in aid of a billion-dollar securities offering.”

Institutional FX

DGCX brokers authorized to provide derivatives trading and clearing services

The DFM is looking to provide multiple asset classes such as; equities, ETFs, equities’ futures, crude oil futures, etc. to meet the growing demand from its diversified base of local and international investors.

<