Unicoin’s Legal Battle with the SEC
Unicoin, a cryptocurrency company, is set to file a motion today aimed at dismissing legal allegations lodged against it by the U.S. Securities and Exchange Commission (SEC). This action follows a lawsuit initiated by the SEC in May, which implicated Unicoin and several top executives in misleading investors.
Allegations and Company Response
The commission claimed the firm raised over $100 million through deceptive practices regarding its cryptocurrency offerings and company stock, all while presenting an image of regulatory compliance. In its upcoming legal response, Unicoin will assert that the SEC’s allegations mischaracterize the firm’s operations and overlook significant disclosures made by the company.
The company emphasizes its commitment to transparency and regulatory adherence, noting that it voluntarily registered its securities and shared audited financial statements with investors while restricting participation to accredited individuals.
In remarks to Decrypt, Unicoin’s CEO, Alex Konanykhin, described the SEC’s lawsuit as politically motivated, suggesting it stems from an effort by former SEC Chair Gary Gensler’s enforcement team to undermine their progress, especially following Unicoin’s high-profile ad campaign in Manhattan.
“Our listing on the NYSE would be a significant blow to his anti-crypto initiatives,” Konanykhin stated, alleging that Gensler has actively tried to thwart their listing efforts.
Subpoenas and Allegations of Misrepresentation
Konanykhin further revealed that the SEC inundated the company with subpoenas in May 2024, disrupting crucial business relationships and asserting that past investigations had consistently cleared Unicoin of wrongdoing. He expressed frustration, claiming that the SEC had fabricated charges against them.
Among the SEC’s specific criticisms was the company’s alleged inflation of property valuations related to various international real estate investments intended to secure their token. However, Unicoin’s legal team will argue that the SEC confused legally binding commitments with actual property transfers and insisted that every deal made was backed by enforceable agreements.
In a notable claim, Unicoin reported a $335 million agreement to purchase a luxury resort in Thailand, stating that it intended to pay above the property’s appraised valuation using Unicoins. Konanykhin explained that their delayed acquisition stemmed from regulatory actions, which hindered the transfer of funds following an initial coin offering.
Financial Health and Investor Relations
Additionally, the SEC asserted that Unicoin misrepresented its financial health while promoting “Unicoin Rights Certificates” and accused Konanykhin of improperly selling nearly 38 million certificates to unqualified investors. Unicoin contends that its marketing material included risk warnings alongside any optimistic projections, challenging the SEC’s interpretation of their communications.
While Konanykhin maintained that he did not sell to unaccredited investors, he admitted to probing the possibility, which he believes led to the SEC’s confusion. He is resolute in contesting the lawsuit, arguing that the SEC’s intervention has cost his investors $billions in potential value, significantly hampering Unicoin’s growth. Konanykhin speculated that if they had gone public a year prior, Unicoin might now be valued at around $25 billion.
Legal Perspectives
Legal experts, however, have indicated that Unicoin faces significant hurdles in its defense. Katherine Reilly, a partner at Pryor Cashman, noted that the SEC’s complaint aligns more closely with traditional securities fraud allegations, detailing serious claims of misrepresentations related to financing and asset backing.
Despite the SEC backing off from some high-profile crypto cases, Reilly suggested that this case represents a continued commitment to enforce regulations in instances of outright fraud. She emphasized the need for clarity in the legal argumentation rather than the recent administration’s perceived alignment with the crypto sector.
The SEC did not respond immediately to requests for comments regarding the matter.
