SEC Sues Crypto Startup Unicoin and Its Executives for Fraud — WSJ
By Caitlin Ostroff and Alexander OsipovichThe Securities and Exchange Commission sued Unicoin, a flashy crypto startup, alleging that the company and its executives misled investors while raising more than $100 million to launch a digital token that it touted as safe, stable and backed by real-world assets such as land in Antigua and the Bahamas.The lawsuit, filed late Tuesday, is one of the SEC's first major enforcement actions taken against a crypto firm since President Trump — a supporter of the digital-currency industry — took office."The SEC's allegations are blatantly false. I intend to prove in court that they constitute yet another case of gross abuse of power," Unicoin Chief Executive Alex Konanykhin said in a statement relayed by a spokesman.What is UnicoinUnicoin is a crypto startup that promoted its plans to launch a token through ads at airports and on thousands of New York City taxis, as well as testimonials from former pro athletes.The company said it was planning to launch a token called unicoin, which would be backed by real estate and equity interests in pre-IPO companies. It has yet to actually launch the token and instead sold certificates that conveyed future rights to the token.The company's website previously suggested that investors could get returns in excess of 9,000,000% for their unicoins, the SEC said in its complaint. Unicoin removed the language from its website earlier this year after The Wall Street Journal asked about it.What does the SEC allege in its complaint?Unicoin falsely said its tokens were "SEC-compliant," "SEC-registered" or "U.S. registered" as it convinced more than 5,000 investors to purchase certificates, according to the SEC's complaint.The agency said Unicoin misled investors about having billions of dollars worth of assets to back its tokens, saying its real estate and equity interests were worth a fraction of the amounts promoted by the company.In late 2023, for instance, Unicoin announced that it had acquired two properties in Antigua valued at $680 million, despite not having an appraisal and executives having doubts about the seller's valuation of the parcels, the SEC said. The agency cited internal communications between Unicoin executives suggesting that the land's real value might be under $40 million.One executive also shared links to court records with another showing that New York disbarred the seller's representative for the properties in 2002, calling him "an immediate threat to the public interest" after he failed to respond to 10 complaints of professional misconduct, the SEC said. Despite such red flags, they followed through with the Antigua deal.The SEC similarly alleged that Unicoin overstated the value of transactions in Argentina, Thailand and the Bahamas.Why is this notable?It has been unclear how aggressive the SEC will be in pursuing enforcement actions against crypto companies under Trump, who has pledged to promote the industry while his family has pursued their own crypto business ventures.The SEC's investigation of Unicoin started under the Biden administration. Under Trump, the agency has dropped a number of Biden-era lawsuits against crypto firms such as Coinbase Global, which were accused of registration violations but not fraud.Konanykhin, the Unicoin CEO, said the SEC's lawsuit "undermines President Trump's efforts to turn America into the Crypto Capital of the World."Write to Caitlin Ostroff at [email protected] and Alexander Osipovich at [email protected]