The U.S. Securities and Exchange Commission (SEC) has charged New York City-based Unicoin, Inc. and three of its top executives with orchestrating a sweeping fraud that allegedly duped more than 5,000 investors out of $110 million through misleading claims and aggressive marketing.

The Allegations

According to the SEC’s complaint, Unicoin and its leadership - CEO and Board Chairman Alex Konanykhin, former President and current board member Silvina Moschini, and former Chief Investment Officer Alex Dominguez conducted a multi-pronged scheme centered on the sale of “rights certificates.” These certificates were marketed as offering future access to Unicoin tokens, a digital asset the company promoted as the “next generation” of cryptocurrency.

The SEC alleges that “Unicoin’s promotional blitz was both broad and bold, featuring advertisements in major airports, on thousands of New York City taxis, and across television and social media. The company claimed its tokens would be “asset-backed” by billions of dollars in real estate and equity interests in pre-IPO companies, and that the offerings were registered with U.S. authorities”, none of which was true.

One of the most striking elements of the SEC’s case is the alleged inflation of Unicoin’s financial claims. While the company boasted of selling more than $3 billion in rights certificates, the SEC asserts that the actual amount raised was no more than $110 million. Furthermore, the real estate and other assets backing the tokens were “never worth more than a small fraction” of what was advertised.

The SEC also accuses CEO Konanykhin of unlawfully selling nearly 38 million rights certificates himself, often to investors barred from the official offering, thereby undermining the company’s exemption from federal registration requirements.

Legal Fallout and Next Steps

The SEC’s complaint, filed in the U.S. District Court for the Southern District of New York, charges Unicoin and its executives with violations of the antifraud provisions of federal securities laws. The agency is seeking permanent injunctive relief, the return of ill-gotten gains with interest, civil penalties, and officer-and-director bans for Konanykhin, Moschini, and Dominguez.

Unicoin’s general counsel, Richard Devlin, was also charged with negligently making false statements in offering documents. He has agreed to settle without admitting or denying the allegations and will pay a $37,500 penalty.

Industry Impact

This enforcement action marks one of the SEC’s most significant moves against a crypto company since the recent change in U.S. administration. While Unicoin has yet to issue a formal public statement in response to the charges, CEO Konanykhin previously indicated the company would fight the allegations in court.

The case underscores the SEC’s ongoing commitment to policing the rapidly evolving crypto sector and serves as a stark warning to companies and executives who might consider stretching the truth to attract investors. For now, the fate of Unicoin and its embattled leadership hangs in the balance, as thousands of investors and the broader crypto industry await the outcome of what could be a landmark legal battle.