The U.S. Department of Justice has unveiled a five-count indictment charging the founders of PlexCoin with wire and securities fraud. The three founders sold the tokens to investors in 2017, and allegedly got away with $8 million.
In its statement, the DoJ announced that a federal grand jury had charged Dominic Lacroix, Sabrina Paradis-Royer and Yan Ouellet with securities fraud, wire fraud and conspiracy to commit money laundering.
The three, all residents of Quebec, Canada, founded PlexCorps in 2017, a company that was behind a worthless token known as PlexCoin. The founders allegedly claimed investing in the token would make the investors overnight millionaires, with the whitepaper quoting a 1,354% return on investment.
As per the whitepaper, the funds raised via the ICO would go towards developing and maintaining the PlexCoin infrastructure. In the future, the funds would supposedly allow PlexCorps to offer additional products and services. The three also claimed that they had a global team of financial and managerial experts based in Singapore, authorities said.
However, the DoJ said the founders channeled most of the money to their personal bank accounts and digital currency wallets for daily living expenses, home renovations and more. The ICO, which kicked off in August 2017 and ended three months later, allegedly raised $8 million.
U.S. Attorney Justin Herdman cautioned the public against investing in Ponzi schemes such as PlexCoin. He stated that while the technology they use may change, securities fraud will be investigated and stopped by the U.S. government, and those culpable punished.
“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,” he stated.
The DoJ joins two other regulators that have charged PlexCoin with fraud. In June, the Quebec financial industry watchdog charged PlexCoin operators with seven offences. According to the regulator, the operators violated securities laws in Canada by making misrepresentations regarding securities transactions and making distributions without a prospectus.
The SEC has also previously charged the scam and its operators with fraud. After two years in court, the two entities settled on a $7 million penalty.
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