Unicoin says SEC distorted its filings in $100M fraud case

Crypto investment platform Unicoin has finally hit back at the Securities and Exchange Commission’s fraud lawsuit after three months, accusing the agency of distorting its regulatory statements to build a case.

Unicoin told a New York federal judge on Wednesday that the SEC’s lawsuit should be dismissed as it “plucks snippets of communications and distorts their meaning and context; treats routine financial projection and optimism as fraud; and ignores Unicoin’s sober warnings about risk.”

“Most bizarrely, the SEC twists Unicoin’s disclosures in the company’s own SEC filings and improperly recasts these disclosures as proof of deception,” it added.

In May, the SEC sued Unicoin, its CEO Alex Konanykhin, board member Silvina Moschini and former investment chief Alex Dominguez, alleging they raised $100 million through misleading investors about certificates that conveyed rights to receive Unicoin tokens and stock.

SEC needs higher standard of proof, Unicoin says

Unicoin argued that the SEC had cobbled together its claims and its allegation that the company violated securities laws needed further proof.

“Securities fraud demands more. It requires a false statement, made with scienter, that reasonable investors would have relied on,” it wrote. “Where, as here, the very risks the SEC identifies were disclosed openly and repeatedly, those elements cannot be met.”

It argued the SEC’s lawsuit was a “shotgun pleading” that didn’t put forward a motive for Unicoin’s alleged actions and relied on circumstantial evidence, “semantics and mischaracterizations of statements taken wholly out of context.”

SEC says Unicoin misled over tokens, certificates

The SEC alleged that Unicoin made misleading statements by saying that billions of dollars worth of real-world assets — such as real estate and equity in pre-IPO companies — would back its upcoming token and rights certificates.

The regulator claimed that in reality, the assets were worth a fraction of what it claimed and the company had misrepresented its financial situation.

The agency alleged that Unicoin said it sold more than $3 billion in rights certificates when the company had only sold $110 million, and falsely advertised the tokens and certificates as SEC-registered.

Unicoin fires back at SEC claims

In its filing, Unicoin argued that the SEC’s claim that it misled investors about the backing of its token relied on statements “taken wholly out of context,” as executives had said the company was asset-backed, not its upcoming tokens.

Where executives had said the token was asset-backed, Unicoin argued that “at no point did any Defendant claim that unicoins would function as a fully collateralized investment.”

It added that the tokens hadn’t been created yet, and the SEC was trying to pin it for “forward-looking expressions of optimism.”

Unicoin said the SEC’s lawsuit had stopped it from being able to mint tokens and back them with assets, while its lawsuit looks to hold it liable “for failing to create tokens that are fully collateralized by real-world assets.”

It added that the SEC had conflated the deal and property value of the company’s real estate transactions, some of which it claimed to have disclosed to investors, were still in the process of closing.

Unicoin asked the court to dismiss the SEC’s lawsuit with prejudice, meaning it would be stopped from re-filing the complaint.