The Wild, Wild West of Finance: ICOs Are Seen As Stocks 2.0 by the SEC
In a move to prove their seriousness in their recent threat to prosecute scam ICOs, the U.S. Securities and Exchange Commission (SEC) filed an emergency asset freeze against the owners of PlexCorps – Dominic Lacroix and Sabrina Paradis-Royer--a very shady recent ICO.
Source: Marketwatch.com
The SEC called Lacroix a continuous Quebec securities law criminal.
According to the SEC press release, PlexCorps was involved in the ICO in August, which guaranteed its PlexCoin investors a more than 1,000 percent return on their investment within 29 days. Thousands of investors paid in, leading to around $15 million for the ICO. I'm amazed at this level of success given such outlandish promises!
The SEC is looking to level some major penalties against PlexCorps, such as permanent restrictions, disgorgement, interest and fees. The SEC is also seeking that Lacroix and Paradis-Royer be banned from promoting coins in the future.
The SEC termed PlexCoin a security because PlexCorps and Lacroix advertised and sold units of value known as PlexCoin on the Internet to worldwide investors. The agency alleges the pair violated anti-fraud provisions with PlexCorps, and that Lacroix's use of PlexCorps violated U.S. federal securities laws.
The SEC recently developed a Cyber Unit to address the ICO fraud. PlexCorps’s owners are the first charges brought on by the unit. According to Cyber Unit head Robert Cohen, the case has all the earmarks of a full-fledged cyber scam – the type of criminal activity the agency is going after. Cohen said the agency reacted swiftly to stop PlexCorps’ criminal activity and protect investors.
More and more of these ICOs are being termed securities offerings and in the future, very likely, every ICO will need to be registered and regulated. Let the red tape begin!
ICOs are seen by many as the financial “Wild, Wild West," which it is.
From what I've seen, many developers make an earnest effort to put together a promising ICO/altcoin but in the end many also fail, much to the chagrin of their investors who often lose all of their investment. Then there are scammers. There will always be scammers and the Steemit and all other communities must be vigilant to watch out for them, irrespective of what governments do to assist.