Cryptocurrency Scam: $15 million fraud exposed by SEC

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The Security and Exchange Commission (SEC) has always made one thing clear: do not get involved in any fraudulent activity.

A cryptocurrency fraud has recently been caught involving an Initial Coin Offering firm called PlexCorp. SEC froze the firm’s assets, claiming the fraud to be up to $15 million from investors which PlexCorp generated by falsely promising a 13x return rate within a month. The company advertises a stable cryptocurrency called PlexCoin.

The SEC filed charges against the owner of PlexCorps, Dominic Lacroix, whom it called “a recidivist Quebec securities law violator”. Charges were also filed against Lacroix’s partner, Sabrina Paradis-Royer. It’s been claimed that PlexCorps marketed PlexCoin by claiming that PlexCoin would yield massive profits in a short period of time which it was unlikely to deliver, a whopping 1354% profit in as less as 29 days.

PlexCorps already has a bad reputation amongst Canadian regulators who ordered it to stop trying to obtain investment for PlexCoin. Previously, Lacroix was also banned from dealing in securities after allegedly defrauding investors in another situation. The SEC claims that PlexCorps violated registration laws of the U.S federal securities laws.

This wasn’t the first time Lacroix had to deal with the AMF either. In 2013, he, alongside another company pleaded guilty to misconduct relating to spreading misinformation, illegal practices, and illegal practice. He was fined $25000 CAD.

These charges were filed by the SEC’s new cyber unit which was created in September. This unit’s primary focus is to monitor any misconduct in the cryptocurrency world such as the spreading of false information or any misconduct regarding ICOs (initial coin offerings) such as the one done by PlexCorps.

Lacroix and his partner Sabrina have also been accused of using up to $200,000 of investments for their own personal expenses. They have also allegedly mocked Canadian rules and regulations by selling T-shirts with “a picture of a man making an offensive gesture” at the name and logo of Quebec’s financial oversight body.

PlexCorps denied accusations on Facebook. They claim that their name and credibility is being damaged because of false allegations. They also claimed these allegations to be “misleading”. It further went on to say on social media:

As far as the SEC is concerned, they demand permanent injunctions, penalties, and disgorgement of profits obtained through fraud plus interest. They also seek to bar Lacroix from operating as a director or officer for a public company and they want the court to ban the PlexCorps organizers rom offering digital securities in the future. The full charges filed against PlexCoincan be read here.

The SEC’s strictness to uphold rules and regulations as shown by its actions against PlexCorps shows that it intends to protect investors in this new and exploitable area of finance. This fall it charged two companies with fraud as well. Such strict regulation is needed for the world of cryptocurrency to expand even further as it is new thus lack of information amongst potential investors can make them vulnerable.

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