No one doubts that the SEC doesn’t take kindly to initial coin offerings. The US agency made that clear quite some time ago. It has now set its sights on PlexCoin, an initial coin offering which it has labeled a scam. It’s an interesting turn of events, and things are not looking all that great for the Canadian cryptocurrency firm operating this project.

PlexCoin is a Potential Scam

With so many initial coin offerings coming to market throughout 2017, it is only normal that a few of these projects have less than legitimate intentions. That’s especially the case for projects whose names are very similar to those of popular brands. Home theater enthusiasts will know of Plex, a popular service that allows users to stream and transmit media from their servers to supporting devices. PlexCoin does not appear to be associated with this company whatsoever.

Instead, this ICO project was created by Dominic Lacroix and Sabrina Paradis-Royer. They also established PlexCorp, which is the official firm associated with the PlexCoin cryptocurrency. According to the SEC, both individuals violated US securities laws and are actively defrauding investors. The first part makes a lot of sense, but calling this project an outright scam is not something that should be done in the absence of solid evidence.

More specifically, the SEC claims this couple stole US$15 million from investors during its initial coin offering. All of PlexCorp’s assets are now frozen as a result of an emergency court order. Moreover, the agency succeeded in freezing the individual assets of both Lacroix and Paradis-Royer while the investigation is still ongoing. This is a remarkable turn of events, although it is not unlikely we will see more such developments in the future. After all, the number of legitimate ICOs is pretty small compared to the total number of projects raising money this way.

This is also not the first time PlexCorp and PlexCoin have faced legal scrutiny over their business model. The project was scrutinized and eventually banned by the Quebec Financial Markets Administrative Tribunal. More specifically, both individuals operating this project can no longer raise money from Quebec residents. Things only got worse last month when the Quebec Superior Court declared the company and both individuals to be in contempt of court.

For the time being, PlexCoin remains listed on CoinMarketCap. The token experienced a massive price increase a few days ago, but its value is dropping like a brick as we speak. No one knows how many PLX are in circulation right now. Moreover, all the trading platforms listing this particular token may receive scrutiny as a result. That wouldn’t be good news for EtherDelta, Cryptopia, or CoinExchange. It will be interesting to see how all this plays out for investors in this ICO. Always do your due diligence before making a financial contribution to any project.

On a related note, the SEC has announced its Cyber Unit. As one would expect, this new outfit focuses on initial coin offerings first and foremost. The initiative has been around since September of 2017, and PlexCoin is the first of its “victims”. Whether or not any other projects will receive similar treatment remains to be determined. For now, any ICO catering to US or Canadian investors may want to get in touch with the SEC itself before the ban hammer comes down on them as well.