SEC Files Charges Against PlexCorps

The SEC Cyber Unit has filed charges in its first case, claiming that PlexCorps defrauded ICO investors:

The Securities and Exchange Commission’s new Cyber Unit has filed its first charges since being formed in September. The unit’s case is being brought against a company called PlexCorps, its founder Dominic Lacroix and his partner Sabrina Paradis-Royer and the SEC claims that Lacroix and Paradis-Royer were actively defrauding investors. PlexCorps was engaged in an initial coin offering (ICO) — which was selling securities called PlexCoin — that had already raised around $15 million since August and it was fraudulently promising that investors would see a 13-fold profit in just under one month. The SEC obtained an emergency asset freeze to halt the ICO.

(https://www.engadget.com/2017/12/04/sec-cyber-units-first-charges-cryptocurrency-fraud/)

Interestingly, this is a straight fraud case, not a claim that PlexCorps is offering securities without a license.  No Howey test, no debate over whether this is a security or a utility token. Just a straight claim that PlexCorps lied and made money from it.  The Complaint is here: https://www.sec.gov/litigation/complaints/2017/comp-pr2017-219.pdf

One gets the sense that the SEC is ramping up.  First warnings and guidance, now fraud cases, and soon unregistered securities offerings.

Author: Michael O'Connor

Michael O'Connor is an attorney in Quinn Emanuel's Washington, DC office. Prior to joining the firm, Michael clerked for the Hon. D. Brooks Smith of the U.S. Court of Appeals for the Third Circuit and worked for several years at another major international law firm. He has dual degrees in Computer Science and Biology from Penn State University. Michael's practice includes intellectual property litigation, antitrust litigation, and data security and privacy. Michael advises clients on legal planning for data breaches, their obligations for safe handling of personally identifiable information, and the legal implications from emerging technologies like Bitcoin, Ethereum, and the blockchain. He has applied his technical training to patent cases involving semiconductor design, systems programming, and mobile device architecture. He has worked on multiple cases at the intersection of patent and antitrust law. Michael represents clients in cases before federal courts throughout the country, as well as before the International Trade Commission.

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