Federal authorities allege a digital currency startup and its top brass misled thousands of people with overblown claims about asset-backed tokens.
The Securities and Exchange Commission has brought charges against Unicoin, Inc., a New York-based company, along with three senior executives, accusing them of orchestrating a scheme that deceived a large number of investors. The SEC’s lawsuit claims the firm and its leaders—CEO and Chairman Alex Konanykhin, former President Silvina Moschini, and former Chief Investment Officer Alex Dominguez—made false statements regarding investment certificates tied to a digital token.
According to the regulator, the startup marketed these certificates as giving buyers future rights to Unicoin tokens, which were pitched as an innovative form of cryptocurrency. The company allegedly promised these tokens would be secured by tangible assets, such as real estate and shares in private companies poised for public listings.
“The company and its executives preyed on investors with illusions that soon-to-be-issued tokens would be backed by real-world holdings,” said Mark Cave, an SEC enforcement official. “But our investigation found the property assets were valued at only a tiny portion of what was advertised.”
The SEC’s filing describes an aggressive marketing blitz, which included advertising at airports, on New York City taxis, and across television and social media platforms. The company claimed its tokens were secured by billions of dollars in real estate and stakes in pre-IPO firms. In reality, authorities say those assets were never worth more than a small percentage of that figure.
More than 5,000 investors are said to have been drawn into the scheme, lured by assertions that the offerings were legally registered with federal authorities. The SEC alleges the company reported selling over $3 billion in rights certificates but actually raised less than $110 million.
The complaint further accuses Konanykhin of personally selling nearly 38 million of these certificates, often to individuals who were barred from the official sale, thus violating exemptions from registration requirements.
Filed in a New York federal court, the case accuses the company and the three executives of breaking securities laws by engaging in fraud. The SEC is seeking financial penalties, the recovery of ill-gotten gains, and prohibits the three men from serving as corporate officers or directors. Unicoin’s general counsel, Richard Devlin, has also been charged with making negligent false statements but has agreed to settle the matter, paying a $37,500 fine without admitting wrongdoing.