SEC Seeks Sanctions Against Founders Of Alleged Crypto Scam PlexCoinbr>
The US Securities and Exchange Commission (SEC) is seeking sanctions against the founders of PlexCoin, an alleged fraudulent initial coin offering (ICO).
In Decemeber 2017, the SEC filed charges against Dominic Lacroix, who the agency called “a recidivist Quebec securities law violator,” and his company, PlexCorps, in federal court in Brooklyn. The complaint alleged that PlexCorps violated securities law when it marketed and sold PlexCoin to investors in the US and elsewhere during its ICO in August 2017. The agency also charged Lacroix’s partner, Sabrina Paradis-Royer, in connection with the scheme. The ICO was believed to have raised $15 million from thousands of investors.
The SEC’s complaint charges Lacroix, Paradis-Royer and PlexCorps with violating the anti-fraud provisions, and Lacroix and PlexCorps with violating the registration provision of the US federal securities laws. In addition to freezing their assets, the court ordered the defendants to produce “a sworn verified written accounting” reflecting the amounts and locations of investor assets raised from the PlexCoin ICO, and to “immediately” transfer to the registry of the court all assets “derived from PlexCoin or PlexCoin Tokens or PlexCorps.” In March, the SEC informed the court that the defendants had repeatedly refused to participate in the discovery process and had not complied with court orders.
The defendants’ assets were frozen for a second time in June. At the time, the SEC alleged that Lacroix has been tapping into those funds since the previous freeze. In August, the court ordered that by September 18 the defendants must submit “a full list of bank and brokerage accounts and any blockchain addresses through which investor funds were solicited or received,” as well as the “sworn verified accounting.” The SEC said Lacroix and Paradis-Royer have neither produced the ordered accounting and list of assets nor repatriated any funds.
On Tuesday, the SEC submitted a document to the New York Eastern District Court, requesting to file a motion for sanctions against the defendants. The SEC argued that the defendants demonstrate no intention of “participating meaningfully” in the ongoing litigation.
“Defendants are, accordingly, once again simply disobeying this court’s orders and the very production deadlines they have repeatedly stipulated to,” the SEC said. “Their persistent failure to comply with the court’s orders evidences that defendants have no intention of participating meaningfully in this litigation. At the same time, the commission is expending valuablere sources and time in preparing for a preliminary injunction hearing, including by gathering documents, arranging for the travel of witnesses domestically and from abroad, retaining an expert witness, and preparing a summary witness to present evidence of defendants’ fraudulent asset raise. The Commission is in the position of having to prepare for the hearing without crucial investor-related information that the Commission needs to pursue this action, all while Defendants continue to control the assets that the Court has ordered repatriated.”
The agency added that delaying the inevitable final judgment only increases the likelihood that defendants will continue to dissipate investor assets in violation of this court’s orders.