The U.S. Securities and Exchange Commission has sued against crypto company Unicoin and three executives on fraud charges for saying the company raised over USD$100 million in tokens backed by real estate when they weren’t.
Filed on Tuesday, the SEC sued Unicorn’s CEO Alexander Konanykhin, former chair Maria Moschini, senior vice president and general council Richard Devlin and former chief investment officer and investor relations officer Alejandro Dominquez on securities law violations.
The SEC alleged that Unicoin misled investors by falsely claiming ownership of real estate properties and inflating their values.
“For example, between September 2023 and January 2024, the Promoting Defendants announced acquisitions of properties in Argentina, Thailand, Antigua, and the Bahamas, purportedly with appraised values totaling more than of USD$1.4 billion; in fact, the majority of those transactions never closed and the actual combined value of the four properties was no more than USD$300 million,” the complaint said.
The SEC alleged that the defendants overstated Unicoin’s sales of its rights certificates. They suggested in social media posts and investor communications that the company had raised far more than it actually did. Unicoin claimed $3 billion in sales by June 2024. In reality, it never sold more than $110 million in rights certificates, according to the complaint.
Furthermore, the SEC said Unicoin aggressively advertised the certificates. It promised outsized returns—up to 9 million percent—in its marketing campaigns. The company promoted its offering through taxi cabs, ferries, elevator screens, digital billboards, coasters, TV programs, news sites, and public Wi-Fi kiosks.
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SEC is highly critical of Unicoin claims
Unicoin is a cryptocurrency that aims to bridge traditional finance with digital assets.
It promotes itself as a next-generation coin backed by equity in emerging growth companies. Unlike Bitcoin, Unicoin claims to be asset-backed and less volatile. The company markets its coin to global investors seeking long-term value. It also issues “rights certificates” that promise early access to Unicoins at discounted rates.
Additionally, Unicoin invests in a portfolio of startups to support its valuation. The company frequently compares its potential growth to Bitcoin’s historic rise. However, critics question its marketing tactics and claims of outsized returns.
The SEC happens to be one of these critics. The filing said the promoting defendants made several bold claims.
They posted on social media and their website about potential returns of 9 million per cent, comparing Unicoin to Bitcoin’s historic rise. They urged investors to act early and buy Unicoins, claiming early Bitcoin adopters became millionaires and even billionaires.
In response, Unicoin’s CEO denied the SEC’s claims. He called the allegations blatantly false and said he plans to prove in court that the case reflects a serious abuse of power.
Konanykhin argued that the SEC has consistently stacked the deck against crypto and continues to do so. He pointed to numerous enforcement cases involving digital assets that the agency later abandoned.
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Unicoin’s aim is to avoid death penalty
In its formal response to the SEC, Unicoin claimed it had been treated unfairly. The company also argued that its sophisticated investors deserved the chance to make their own decisions.
“Unicoin seeks one thing and one thing only: to avoid the death penalty,” the company argued in the filing. “Its investors deserve an opportunity to achieve value from their purchase of rights to the future unicoins.”
The SEC issued a Wells notice to Unicoin last December, signaling its intent to file securities fraud charges. At the time, the agency was led by former Chair Gary Gensler.
Last month, Konanykhin informed shareholders that Unicoin had rejected the SEC’s proposed settlement. The agency had set an April 18 deadline for a negotiation meeting, which Unicoin refused to attend.
Konanykhin said the SEC made pre-meeting demands that he found unacceptable. He also claimed the investigation had caused the company billions of dollars in damages.
During Gensler’s tenure as SEC chair, the agency adopted a stringent approach toward the cryptocurrency industry, emphasizing investor protection and regulatory compliance. Under his leadership, the SEC initiated high-profile enforcement actions against major crypto firms, including Ripple, Coinbase, and Binance. Critics argued that this aggressive stance stifled innovation and created regulatory uncertainty, as many enforcement cases were prolonged or eventually dropped.
In contrast, former President Donald Trump has expressed support for the cryptocurrency sector, pledging to foster a more crypto-friendly environment in the United States. He has promised to ease regulatory burdens and promote blockchain innovation, aiming to position the U.S. as a global leader in financial technology.
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