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Feds Shut Down Allegedly Fraudulent Cryptocurrency Offering (arstechnica.com)

Posted by BeauHD on from the first-of-its-kind dept.

An anonymous reader quotes a report from Ars Technica: The Securities and Exchange Commission on Monday announced that it was taking action against an initial coin offering (ICO) that the SEC alleges is fraudulent. The announcement represents the first enforcement action by the SEC's recently created cyber fraud unit. In July, the agency fired a warning shot. It announced that a 2016 fundraising campaign had run afoul of securities law, but that the SEC would decline to prosecute those responsible. The hope was to get the cryptocurrency world to take securities laws more seriously without doing anything drastic. Now the SEC is taking the next step by prosecuting what it considers to be one of the most egregious scams in the ICO world. The SEC's complaint, filed in federal court in New York, is against Dominic Lacroix, whom the SEC describes as a "recidivist securities law violator." The SEC considers Lacroix's cryptocurrency project, PlexCoin, to be a "fast-moving Initial Coin Offering (ICO) fraud that raised up to $15 million from thousands of investors since August by falsely promising a 13-fold profit in less than a month." The PlexCoin website has a hilariously vague description of this supposedly revolutionary cryptocurrency. "The PlexCoin's new revolutionary operating structure is safer and much easier to use than any other current cryptocurrency," the site proclaims. "One of the many features of PlexBank will be to secure your cryptocurrency from market variation, which is highly volatile, and invest your money in a place where you can get interesting guaranteed returns." According to Ars, "The SEC isn't impressed and is arguing that PlexCoin has 'all of the characteristics of a full-fledged cyber scam.' The agency is seeking to freeze the assets of the PlexCoin project in hopes of getting investors' funds back to them."

7 of 47 comments (clear)

  1. Here's what you need to know about ICOs by slashmydots · · Score: 2

    ICOs are illegal methods of commercial fundraiser in almost all countries and they're basically Kickstarter and GoFundMe but less reliable with less accountability and zero oversight. That is not an exaggeration, that is exactly how I describe it.

    1. Re:Here's what you need to know about ICOs by Aighearach · · Score: 2, Interesting

      Horse shit. The US is a significant country, and ICOs are totally legal here.

      What was illegal and fraudulent about this one was that they advertised returns that had no objective basis. If you want to promise return on investment, you have to have some sort of history to show, or at least some reasonable assumptions. If you just make up a crazy number and say people will earn that much you're gonna get the smackdown.

      The SEC is being very clear here; this case is about false promises.

  2. Re:I'm into crypto-currencies by rtb61 · · Score: 2

    So you bought into fake money, where the originators ground out something like fifty percent of the available coins, what, to make them rich? Watch out for the bitcoin bomb, it is bitcoin holders who are at the moment being set up to be mined for the real currency.

    --
    Chaos - everything, everywhere, everywhen
  3. 1 down lots more to go. by Mr307 · · Score: 4, Interesting

    They are all some hybrid of a ponzi/pyramid/mlm scam.

    Certainly someone will come along and say how 'you dont know how they work, so you dont know what you are talking about'.

    And thats fine, but it appears that the scarcity feature isn't. When an infinite number of 'coins' can be made on a whim, anyone can make Super Bitcoin tomorrow then the day after the next brainiac can make Super Duper Bitcoin, then we'll get Super Ultra Duper Bitcoin(the bestest ever), and so on.

    So there is no overarching scarcity, yes there may be scarcity within a particular set but any set can be forked or duplicated with no restrictions, and new sets made to infinity. Any perceived value appears to have more to do with marketing, speculation and wishful thinking than anything 'real'.

    1. Re:1 down lots more to go. by Hal_Porter · · Score: 2

      Someone really needs to launch TulipCoin.

      --
      echo -e 'global _start\n _start:\n mov eax, 2\n int 80h\n jmp _start' > a.asm; nasm a.asm -f elf; ld a.o -o a;
    2. Re:1 down lots more to go. by torkus · · Score: 2

      *yawn* More posts about this than useful things said about crypto currency in these threads i think (well, tulips and trump).

      We get the point. Many of us remember the 90s tech bubble and almost all know the late 2000s mortgage bubble/financial crisis.

      Nowadays, tech stocks are major market players and many of the biggest today were founded in the 90s among all the others which went poof (you may have heard of google, amazon, paypal, ebay, etc). My point being that not everything goes poof with a bubble.

      Most of the ICOs are getting money because laymen are speculating with play money. Throw $100 each into a few coins and see what happens...because they know full well if they did that the first time they heard of bitcoin they'd be retiring today. I would too.

      --
      You can get rich if you own a politician, but you have to be rich to buy one in the first place.
  4. Not really by Interfacer · · Score: 3, Insightful

    Plenty of coin are scams or 'get rich quick' schemes that sponsor the developers of a crypto project. But scarcity is still assured because while there can be infinite coins, most of them are coins that people don't want, or want badly enough.

    Bitcoin will always be scarce. Having some schmuck mint another billion Doge coins on a whim is not going to affect scarcity at all because those are pretty much the equivalent of monopoly money compared to Euros or Dollars.