Unicoin’s Legal Battle with the SEC
Unicoin, a cryptocurrency investment firm based in Miami, is preparing to engage in a legal battle with the U.S. Securities and Exchange Commission (SEC). The SEC’s Division of Enforcement has initiated an investigation into allegations that Unicoin violated federal securities laws concerning both registration and fraud.
Co-Founder’s Commitment
Co-founder Alex Konanykhin disclosed that the SEC had issued a deadline of April 18 for Unicoin to enter into settlement discussions. With that date now in the past, Konanykhin has asserted his commitment to contest the allegations in court rather than seek a settlement.
“It is unfair for the most compliant crypto company in the U.S. to face prosecution from the SEC.”
In an interview with Decrypt, he expressed his intention to prevail in litigation, emphasizing that Unicoin has diligently reported financial information to the SEC for over three years. He hinted at the possibility of launching a preemptive lawsuit against the agency, claiming they have inflicted considerable financial harm on Unicoin’s shareholders and overall business.
SEC’s Shift in Enforcement Strategy
The SEC, led by a newly appointed Republican administration, has recently reversed multiple enforcement actions initiated against major crypto entities like Coinbase, Ripple, and Kraken. This change indicates a potential shift in the agency’s approach to cryptocurrency regulation, with plans to draft legislation that could create a more favorable environment for crypto businesses.
However, Unicoin faces serious accusations regarding violations of antifraud laws under the Securities Act and Exchange Act. Acting Chair Mark Uyeda has hinted at the agency’s commitment to pursue fraud-related cases.
Allegations Against Unicoin
A Wells notice issued in December outlines allegations that Unicoin distributed its UNIC tokens through airdrops without confirming the accredited status of the recipients. Furthermore, the SEC contends that Unicoin made false representations about the nature of these tokens, claimed inflated sales figures, and misled about ownership of real estate abroad. Another claim points to Konanykhin’s improper resale of limited securities without adhering to necessary exemption criteria.
Konanykhin strongly denies these allegations, arguing that the case is less about legal compliance and more a reflection of resistance within the SEC’s ranks to the evolving regulatory landscape under new leadership. He contends that the charges stem from officials who remain from the Gensler era, who are eager to secure enforcement victories despite the overall reduction of crypto litigation efforts.
Continued Engagement Efforts
He specifically called out Brad Ney, an assistant director in the SEC’s enforcement division, as a key figure in the investigation against Unicoin, alleging that Ney is operating independently of the agency’s new leadership philosophy. Earlier, Unicoin sought a direct meeting with the Crypto Task Force, which has engaged with numerous crypto entities since February, but has yet to receive a response.
As the situation develops, it remains to be seen how the SEC’s renewed enforcement strategies will unfold and what implications they hold for Unicoin’s future operations.
