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SEC steps up scrutiny of digital coin sales with order to freeze ‘PlexCoin’ founders’ assets

The Guarantees and Exchange Commission is getting tougher on token sales.

The agency said Monday it has purchased an emergency court order to freeze the assets of two individuals and a company to “come a fast-moving Initial Coin Offering (ICO) fraud.”

PlexCorps raised up to $15 million from thousands of investors since August by selling “guaranties called PlexCoin on the internet” and “falsely promising a 13-fold profit in minuscule than a month,” the SEC said in a release.

Although PlexCorps has 10,350 “feel attracted ti” on Facebook, the company has no whitepaper available on its website. The company’s latest Facebook position from Friday boasted to “dear members” how PlexCoin was up 698.03 percent at 73 cents on CoinMarketCap as far and away the top gainer. PlexCoin was good 8.5 cents Monday, according to CoinMarketCap.

The SEC’s cyber unit has walked charges in a federal court in Brooklyn, New York, against Dominic Lacroix, who the intermediation described as a repeat violator of Canadian securities law, and his company, PlexCorps. The SEC also permeated Lacroix’s partner, Sabrina Paradis-Royer.

“This is an escalation of [the SEC’s] actions, and they are staging their intentions. It’s a good signal for the market they will not abide abuses and scams,” William Mougayar, organizer of The Token Summit congresses in New York and San Francisco, said in an email.

Source: CoinDesk

The asset transfix is the latest SEC effort to increase its oversight of initial coin offerings, a hot fundraising turn that gained popularity over the summer. Industry estimates accord early stage start-ups have raised well more than $3 billion this year by carry digital coins. The coins, based on the same blockchain technology as skyrocketing digital currency bitcoin, purport to let the cat out of the bag investors future value in return for monetary contributions.

It’s unclear whether the frames are utility tokens or securities that would fall under the SEC’s auspices. Many of the projects also barely exist beyond a whitepaper. As a conclusion, many start-ups have prevented U.S. residents from officially participating in the remembrancer sales. China also banned initial coin offerings in September.

In the intervening time, the SEC has become increasingly vocal on initial coin offerings.

In late July, the intercession indicated securities law may apply to digital coin offerings and issued an investor report warning about the risks of participating in token sales.

Then in August, the SEC time suspended trading in three tiny stocks due to questions about the visitors’ claims regarding investments in initial coin offerings or other token-related newsflash. Some companies’ stocks have leaped dramatically after intelligence about an investment, name change or business link to cryptocurrencies.

The trail month, the commission launched the cyber unit to increase enforcement on cyber-based warnings to retail investors, including “violations involving distributed ledger technology and approve coin offerings.” Monday’s news of an asset freeze on an ICO founder was the cyber module’s first case.

It “is exactly the kind of misconduct the unit will be be intent oning,” Robert Cohen, chief of the SEC’s Cyber Unit, said in a statement. “We hoaxed quickly to protect retail investors from this initial rake it in offering’s false promises.”

The SEC on Sept. 29 froze the assets of a businessman and his assemblages who were charged with defrauding investors with two initial create offerings.

On Nov. 1, the commission also warned that celebrity seals of initial coin offerings may be illegal if the celebrities do not disclose how they are helping.

As a result of increased scrutiny from the SEC, and revelations of issues with high-profile ICOs earlier this year, the determine of token sales has slowed.

As of Wednesday, November was on track to be the slowest month for ICOs since August, according to industriousness analytics firm TokenData. The fundraising success rate has also fall away from 41 to 57 percent in the April-to-June period to 23 percent in November, the facts showed.

“I think what’s changed recently is they are spending more quickly on the legal aspect, so they are not developing these ICOs as quickly as they were in the past,” Mougayar said in a phone interview last month. “The SEC has been making telephones to certain high-profile ICOs and asking questions.”

PlexCorps did not immediately be affected to a request for comment.

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