SEC Levels Fraud Charges Against Unicoin, Top Execs Over Alleged Crypto and Stock Schemes

The U.S. Securities and Exchange Commission announced charges against New York City-based Unicoin Inc. and three of its highest-ranking executives for allegedly making false and misleading statements in offerings of certificates purporting to convey rights to crypto assets called Unicoin tokens, as well as in an offering of Unicoin’s common stock.

From February 2022 to the present, the defendants allegedly engaged in a massive securities offering fraud through which they raised more than $100 million from investors in the United States and abroad.

The executives charged are Alex Konanykhin, chief executive officer and board chairman; Silvina Moschini, former president, former board chairwoman, and current board member; and Alex Dominguez, former chief investment officer. Additionally, Unicoin’s general counsel, Richard Devlin, faces charges for negligently making similar misstatements.

According to Mark Cave, associate director in the SEC’s Division of Enforcement: “We allege that Unicoin and its executives exploited thousands of investors with fictitious promises that its tokens, when issued, would be backed by real-world assets including an international portfolio of valuable real estate holdings.”

Cave further stated, “But as we allege, the real estate assets were worth a mere fraction of what the company claimed, and the majority of the company’s sales of rights certificates were illusory. Unicoin’s most senior executives are alleged to have perpetuated the fraud, and today’s action seeks accountability for their conduct.”

The SEC’s complaint, filed in the U.S. District Court for the Southern District of New York, details Unicoin’s extensive promotional efforts, which included advertisements in major airports, on thousands of New York City taxis, and across television and social media. These efforts allegedly convinced more than 5,000 investors to purchase rights certificates based on several false and misleading claims:

• Unicoin tokens were presented as “asset-backed” by billions of dollars of real estate and equity interests in pre-initial public offering companies, when in reality, Unicoin’s assets were never worth more than a small fraction of that amount.
• The company claimed to have sold over $3 billion in rights certificates, yet it raised no more than $110 million.
• Investors were misled to believe the rights certificates and Unicoin tokens were “SEC-registered” or “U.S. registered” when they were not.

One false promotional message, e.g., in November 2022, Unicoin, Konanykhin, and Moschini announced that the company had “reached the milestone of $200 million in sales of unicoins to individual and corporate investors.” Subsequent announcements touted ever-increasing sales figures, with the defendants claiming that the company had sold “half a billion” dollars of Unicoin tokens by June 2023, $2 billion by March 2024, and more than “$3 billion in Unicoin sales” by June 2024.

The SEC further alleges that Unicoin and Konanykhin violated federal securities laws through unregistered offers and sales of rights certificates. Konanykhin is accused of offering and selling over 37.9 million of his personal rights certificates to secure better pricing and target investors the company had specifically excluded from the offering, reportedly to avoid jeopardizing its exemption to registration requirements.

The complaint charges Unicoin, Konanykhin, Moschini, and Dominguez with violations of the antifraud provisions of the federal securities laws, and Konanykhin and Unicoin with violating the registration provisions of the Securities Act of 1933. Konanykhin is also charged as a control person for certain of Unicoin’s antifraud violations. The SEC is seeking permanent injunctive relief, disgorgement of ill-gotten gains with prejudgment interest, and civil penalties against all four, along with officer-and-director bars against Konanykhin, Moschini, and Dominguez.

In a related development, Devlin was charged with violating antifraud provisions for negligently making similar misstatements in private placement memoranda used by Unicoin to offer and sell rights certificates and common stock. Without admitting or denying the SEC’s allegations, Devlin has consented to a final judgment that includes permanent injunctive relief and a $37,500 civil penalty.

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