Authorities have charged three Canadians with fraud for their part in operating the PlexCoin ICO scam that stole US$8 million [AUS$11.17 million] from its victims.
The three defendants are the two owners of PlexCorps, Dominic Lacroix, age 38, and Sabrina Paradis-Royer, age 26, and former employee Yan Ouellet, age 36. The trio, all hailing from Quebec, are charged with “conspiracy to commit securities fraud and wire fraud, conspiracy to commit money laundering, and wire fraud.”
Massive ICO scam
Law enforcement alleges that the three defendants conspired to lure investors into buying PlexCoin, a cryptocurrency offered through the PlexCorps company. The ICO scam took place from May 2017 to December 2017.
The scam was promoted via websites and social media. The defendants allegedly made false claims about the company and the cryptocurrency.
One false claim was that the management consisted of a global team of experts in the fields of finance, management, and other crypto-related areas and that the team was based in Singapore.
Another false claim was that money raised from the PlexCoin ICO was to develop additional products for PlexCorps. Investors were also told that they would get a substantial return on their investment. (Such claims are usually a major red flag when it comes to cryptocurrency scams.) The whitepaper for the project claimed a possible return of 1,354% on the investment in the PlexCoin ICO.
A final part of the ICO scam was that important material facts about the ownership and operation of PlexCorps were not told to investors.
Overall, the ICO scam raked in US$8 million [AUS$11.17 million]. Investors bought PlexCoin using U.S. and Canadian dollars, as well as cryptocurrency in the form of Bitcoin, Ether, and Litecoin.
Money used for personal gain
The money raised from the ICO was diverted into the personal fiat accounts and cryptocurrency wallets of the three defendants. The funds were used for home renovation projects and daily living expenses.
U.S. Attorney Justin Herdman stated, “While technologies and the means to make investments may change, one thing remains constant – securities fraud ruins lives and deprives victims of their hard-earned money and savings.”
He added, “Digital currencies are a new type of investment, and just like with traditional securities, you should take the time to research and know exactly what you’re getting into before making any type of investment.”
FBI Special Agent in Charge Eric B. Smith said, “This investigation highlights the specialized skills of FBI Cleveland’s Midwestern Cryptocurrency Task Force in addressing matters involving cryptocurrency. FBI Cleveland and its task force partners are committed to ensuring new and evolving financial technology is not used as a license to steal and evade scrutiny by law enforcement.”
The SEC filed an asset freeze against PlexCorps back in December 2017. Last August, the SEC reached an agreement with Lacroix, Paradis-Royer, and PlexCorps. The two owners were required to pay US$4.5 million [AUS$6.28 million], with an additional US$1 million [AUS$1.4 million] in civil penalties and additional prejudgment interest of US$348,145.25 [AUS$486,005.20].