US Regulators have been cracking down on fraud that is occurring in the cryptocurrency world with the often suspicious market on initial coin offerings being the home base for fraud. The Securities and Exchange Commission announced as of Monday, November 4th, that they halted a “falsely promising” fraudulent ICO which claimed to offer investors up to 1,000% returns.
While most investors would be wary of investing in this type of promise, many decided to sink their money into it without looking further. Initial coin offerings has been the latest fad in the cryptocurrency world, with the promise of giving investors high returns being the main basis for investing. An ICO is incredibly similar to an IPO, except instead of offering stock in the company, they are offering coins that can be either held onto for investment sake, or traded for their choice of currency.
ICOs have become one of the largest ways to raise money as of this year, and have so far raised as much as $3 billion as a whole. They have also been at the brunt of many regulatory actions as they often are fraudulent and offer unrealistic promises. The case on Monday, consisted of the SEC filing charges against Dominic Lacroix and his from known as PlexCorps. The firm managed to gain as much as $15 million from individual investors.
A statement released said that “The Commission’s complaint, filed in federal court in Brooklyn, New York, alleges that Lacroix and PlexCorps marketed and sold securities called PlexCoin on the internet to investors in the U.S. and elsewhere, claiming that investments in PlexCoin would yield a 1,354 percent profit in less than 29 days.” The hopes are high that this can be resolved quickly, and those who put their money in are able to get it back.