The U.S. Securities and Exchange Commission (SEC) has taken action against Unicoin, a crypto investment firm, by issuing a Wells Notice indicating its intention to file a lawsuit. This move is part of the SEC’s continued enforcement efforts against cryptocurrency companies under outgoing Chair Gary Gensler. Unicoin, known for its unique structure and connections to the television series Unicorn Hunters, is facing accusations of fraud, deceptive practices, and selling unregistered securities.
Unicoin’s CEO, Alex Konanykhin, revealed that the SEC’s crypto enforcement division issued warrants to the company and others in May, focusing on Unicoin’s cryptocurrency backed by real-world assets. Despite entering into a standstill agreement with the SEC earlier this year, Unicoin allegedly breached the agreement by planning to go public through a reverse merger after Donald Trump’s election victory.
The Wells Notice against Unicoin includes fraud-related allegations, a departure from previous SEC actions against crypto companies. Konanykhin has stated that Unicoin’s legal team is preparing to respond to the SEC’s claims by December 24, criticizing the agency’s motives as an attempt to thwart the company’s planned ICO.
Unicoin’s token model involves collateralizing cryptocurrency with real-world assets, such as real estate. The company’s acquisition of land in the Bahamas valued at over $500 million in exchange for token offerings has attracted approximately 70,000 investors. Despite identifying its token as a security and adhering to public reporting practices, Unicoin has faced multiple SEC investigations over the years.
The SEC’s scrutiny of Unicoin comes as Gary Gensler, known for his strict enforcement measures in the crypto sector, nears the end of his term. Gensler’s tenure has been marked by lawsuits and investigations targeting major cryptocurrency companies and public figures involved in digital assets. Despite his impending departure, the SEC continues to issue lawsuits and Wells Notices to companies like Unicoin and CyberKongz.
CyberKongz, a web3 gaming project, recently disclosed receiving a Wells Notice from the SEC, raising concerns about the agency’s enforcement stance on blockchain-based digital assets. The team plans to challenge the SEC’s claims, emphasizing their commitment to innovation within the web3 space and defending NFT projects against unclear regulatory frameworks.
The public disclosure of Wells Notices against Unicoin and CyberKongz highlights the ongoing regulatory challenges faced by crypto firms. As the SEC’s actions continue to impact the industry, companies like CyberKongz are prepared to defend their projects and support others facing similar regulatory issues. The outcome of these cases could determine critical pathways for the future of blockchain technology and digital assets.