SEC Obtains Emergency Order to Block ICO "Scam"

The SEC obtained an emergency injunction preventing a Canadian "recidivist securities law violator" and his business partner from continuing to raise funds through an initial coin offering ("ICO"). The charges were the first to be filed by the recently established SEC Cyber Unit.

In a Complaint filed in the U.S. District Court for the Eastern District of New York, the SEC alleged that Dominic Lacroix and his company, PlexCorps, as well as his business partner, Sabrina Pradis-Royer (collectively, the "Defendants"), raised over $15 million by fraudulently marketing and selling securities as digital tokens called PlexCoins. According to the Complaint, Mr. Lacroix represented to the investors that they would receive "outlandish" returns on their investments, derived from (i) appreciation of token value through investments made by PlexCorps with the proceeds of the ICO, (ii) distribution to investors of PlexCorps profits, and (iii) appreciation of token value related to efforts of the PlexCorps "market maintenance team," including through listing the token on digital asset exchanges.

The SEC alleged further that proceeds from the PlexCoin ICO were intended to fund the Defendants' personal expenses, and that there was no reasonable basis for the projections offered by Mr. Lacroix for returns on investments in PlexCoin. The SEC also charged the Defendants with violations of Section 5 of the Securities Act.

As a result of the emergency order, the SEC froze the assets of the Defendants, and blocked the continued operation of PlexCorps and the offering of the PlexCoin ICO.