SEC reveals more details about PlexCoin ICO scam

Maria Nikolova

The defendants misstated the amount raised via the PlexCoin initial coin offering and kept misappropriating investor funds long after the start of the SEC action.

More than a year has passed since the United States Securities and Exchange Commission (SEC) launched its emergency action against PlexCorps aka PlexCoin and Sidepay.ca, Dominic Lacroix and Sabrina Paradis-Royer, over an unregistered offer and sale of securities called “PlexCoin” or “PlexCoin Tokens” in a purported “Initial Coin Offering”.

On Tuesday, February 19, 2019, the SEC filed a proposed amended complaint with the New York Eastern District Court, revealing more details about the scam.

The amendments relate to additional deceptive acts and misstatements by the defendants, including statements relating to the amounts of funds raised during the PlexCoin ICO.

The SEC alleges that the defendants manipulated the amount of PlexCoin sold during the ICO, permitting them to sell PlexCoin to certain investors at inflated prices and to give the impression that the PlexCoin ICO was more successful than it actually was.

As alleged in the proposed Amended Complaint, the defendants lied to investors about the amount of funds raised in connection with the PlexCoin ICO. Initially, that amount was said to be nearly $15 million but now it turns out to be approximately $8.5 million. Put simply, the defendants lied about the success of the ICO in order to lure more investors.

The SEC’s amended complaint also discloses more details about the conduct of the individuals behind PlexCoin after the launch of the SEC enforcement action.

Despite the Quebec Tribunal’s and the New York Eastern District Court’s Orders, on or around April 2018, the defendants posted on the PlexCorps Facebook Page that they wished to “update [readers] on the current situation with the authorities,” that they had seen “a lot of bullshit about [them] in a lot of media articles.”

Subsequently, the defendants falsely stated on the PlexCorps Facebook Page that “the PlexCoin project is not dead, it is simply on hold” and that “nobody from the United States . . . could buy PlexCoin.” They further falsely reassured “people that 100% of the money used to buy their PlexCoin, by credit card, is still in the bank accounts and ready to be used to pay you back,” despite knowing that Lacroix and Paradis-Royer had misappropriated a significant portion of those funds.

By June 2018, Lacroix had transferred at least approximately 420 bitcoin tokens in breach of the freeze orders rendered by the Quebec Tribunal and the New York Eastern District Court.

Furthermore, in the face of the Quebec Tribunal’s and the New York Eastern District Court’s Orders, Lacroix and Paradis-Royer have taken additional steps to misappropriate funds from the PlexCoin ICO and to continue their comfortable lifestyles uninterrupted by these proceedings, the SEC says.

These steps included:

  • from January through June 2018, transferring hundreds of thousands of dollars’ worth of Bitcoin obtained from PlexCoin Token investors into accounts at a service called Satoshi Portal that Lacroix controls, and dissipating at least over $50,000 of those funds through a newly opened account at Tangerine; and
  • on or around February and July 2018, transferring hundreds of thousands of dollars’ worth of digital assets through a digital asset conversion service known as “ShapeShift” and further transferring, encumbering, selling, and alienating those assets on digital blockchains and elsewhere.

The Commission now seeks a final judgment: (a) permanently enjoining the Defendants from engaging in acts, practices and courses of business alleged herein; (b) ordering Defendants to disgorge their ill-gotten gains and to pay prejudgment interest thereon; (c) prohibiting Defendant Lacroix from acting as an officer or director of any public company; (d) prohibiting Defendants Lacroix and Paradis-Royer from participating in an offering of digital securities; and (e) imposing civil money penalties on the defendants.

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