Fenwick securities enforcement co-chair Michael Dicke spoke with The Recorder about the first enforcement action of the U.S. Securities and Commission’s new Cyber Unit—a court order to freeze the assets of individuals behind an initial coin offering (“ICO”) that falsely promised a 13-fold profit in less than a month.
Filed in federal court in Brooklyn, New York, the SEC’s complaint alleges that a Quebec securities law violator and his company marketed and sold securities called PlexCoin in an ICO to investors in the U.S. and elsewhere. The coin offering had claimed the investments would yield a 1,354 percent profit in less than 29 days.
Formerly the head of enforcement for the SEC’s San Francisco regional office, Dicke told The Recorder that the SEC’s enforcement action was not surprising, given the commission’s messaging in recent months that it would aggressively pursue ICO frauds. He pointed out that it is unlikely to shed more light on how the SEC determines whether an ICO is a security.
“It’s clear out-and-out fraud that has the ICO component, so it fits in with what the SEC has been talking about in different speeches. The question is what [will the SEC do] if there’s not fraud, but there’s a registration violation. That’s unanswered,” Dicke noted.
The full article is available through The Recorder website (subscription required).