The SEC has made significant progress in their investigation of the $15 million scam orchestrated by ICO PlexCoin. PlexCoin came under hot water with U.S. regulatory authorities after it was revealed that the company was illegally profiting by defrauding thousands of investors with off-site investment pools only accessible to precious few executives employed by the organization.
This wasn’t the first time the company’s organizer, Dominic Lacroix, has had a problem with regulatory leaders in North America, either. An order from Quebec’s regulatory authority in July also had the man in trouble with the law. This particular order prevented he and his associates from depositing any PlexCoin profit within the country.
Additionally, an earlier charge in 2013 resulted in Lacroix pleading guilty to fraud charges and paying a measly $25,000 fine to a Canadian court.
This time, both Lacroix and his business partner Sabrina Paradis-Royer are being charged by the SEC with defrauding their investors of millions. PlexCoin promised ridiculously-high returns for hopeful investors, and the duo purportedly made their profit off of selling the tokens in order to artificially inflate the price before selling some of their own many shares.
A Canadian injunction ordered that the company, which had operated primarily in Canada, immediately cease their business practices. Though PlexCoin did end their operations in Canada, they responded by moving immediately to the United States. Experts speculate that it was this immediate transition that initially turned the Securities and Exchange Commission onto the company.
PlexCoin attempted to mitigate the investigative efforts of the SEC, filing their own motion alleging that the SEC was committing an overreach of their power in attempting to regulate person who “are not subject” to their jurisdiction. The main crux of the argument in this motion was that a person would have to commit fraud by lying and saying that they are not a US citizen in order to purchase PlexCoin—the site does not allow U.S. citizens to purchase the coin.
This is heavily contested by the SEC, who views the company’s deliberate movement to the United States as a direct contradiction of the point of their motion filed. The motion to dismiss the SEC’s charges was not granted, and the duo has been given a court order forcing them to appear in New York for questioning on April 30th.
In this latest move following what is assumed to be a questioning period, the SEC has ordered a deposition. A deposition is a legally-binding request for sworn-evidence. It is unclear thus far what the SEC is going to be targeting for the length of the investigation, or which questions will be of greatest consequence for the cryptocurrency community.
But PlexCoin’s downfall could have serious implications for the future regulation of ICOs. Court precedents set in a hypothetical high-court adjudication could help to contribute to the growing body of legal precedence regarding the regulation of cryptocurrencies sold in massive crowdfunding ICO campaigns.
The SEC has not yet released a statement detailing a timeline of the PlexCoin investigation, which is still ongoing.