Remember those bold statements by the incoming Trump Administration about making the U.S. “the crypto capital of the planet”?
Remember how President Trump’s “crypto czar” David Sacks promised to usher in “a golden age in digital assets”?
Remember when President Trump named cryptocurrency advocate Paul Atkins as the new chair of the Securities and Exchange Commission (SEC), replacing stridently anti-crypto Gary Gensler, who never found a crypto pioneer he did not want to destroy?
President Trump himself promised that Chairman Atkins “recognizes that digital assets and other innovations are crucial to making America greater than ever before.”
And back in January, the Atkins-led SEC promised to quickly end the Gensler practice of relying on enforcement actions to regulate crypto companies into bankruptcy (just as the Nuclear Regulatory Commission has for decades labored to bankrupt nuclear energy companies).
True to form, in February and March alone, the SEC [http://SEC%20Retreat?%20Crypto%20Lawsuits%20Suddenly%20Paused%20or%20Dismissed]dropped or paused lawsuits and investigations against a dozen cryptocurrency firms, including crypto giants Binance, Ripple, and Coinbase.
So what could be the reason that the same Atkins-led SEC on May 20 filed a “massive lawsuit” against Unicoin Inc., its founding partners Alex Konanykhin and Silvina Moschini, and other company executives?
The SEC would claim that Unicoin had organized a $100 million fraud. The formal charges came a month after Konanykhin rejected a settlement requiring an admission of liability.
True, the Gensler-led SEC’s campaign against Unicoin began when it issued subpoenas against the company in May 2024. Then they blocked a planned September 2024 initial coin offering (ICO). In December, they would go on to issue a Wells Notice announcing plans to formally accuse Unicoin of violations related to fraud, deceptive practices, and the offering and sale of unregistered securities.
Noting at the time that Gensler had filed similar charges against a myriad of companies in his final days in office, Konanykhin said the charges were “complete and utter BS".
"We would likely be a $10 billion+, publicly traded company by now, if the SEC had not blocked our ICO,” he added.
When the bombshell charges were formally filed a week ago, many wondered if this was an attempt by SEC careerist holdovers at sabotaging the Trump crypto agenda.
The SEC’s complaint charges that Unicoin marketed and sold “rights certificates” that allowed investors early access to Unicoin tokens along with equity in the company.
The SEC also claimed that Unicoin had grossly overstated the value of its real-world assets, claiming it had raised $3 billion but had only raised $110 million from its 5,000 investors. Thus, said SEC associate enforcement director Mark Cave, these sales were illusory and Unicoin and its executives had exploited its investors with “fictitious promises.”
Konanykhin, however, pointed the finger at Brad Ney, the SEC’s assistant director in the SEC’s Division of Enforcement, whose team last May had issued the initial subpoenas in what he calls a “calculate campaign of disruption and intimidation.” Ney’s war on Unicoin pushed Konanykhin to move to Switzerland. Only after the election of Donald Trump in November did Ney issue the Wells Notice.
One of Ney’s claims was that Unicoin had violated securities laws by distributing free Unicoins, following a common “airdrop” marketing strategy, but that claim was dropped once the SEC realized that even President Trump (along with hundreds of non-crypto companies) also utilized the airdrop strategy.
Konanykhin claims that all of Ney’s accusations are baseless and an “unconstitutional overreach.”
"Advertising and brand creation are not unlawful", he said, "...but trying to destroy a business by accusing it of 'extensive promotional efforts' is unlawful. That’s a major reason that 18 states have sued the SEC for its unconstitutional war on cryptocurrencies".
Konanykhin further responded that, to falsely accuse Unicoin of inflating sales, “rogue SEC officials” counted only cash sales and excluded all other sales categories, which exceeded $3 billion in well-documented and independently appraised deals.
Yet 'buy now pay later' sales, stock deals, and asset swaps are a massive part of the U.S. economy, especially when companies want to preserve cash.
Moschini, a widely respected advocate for economic empowerment of women through technology, told this writer that what the SEC is doing is an unequivocal embarrassment. Ney and his henchmen refuse to understand that Unicoin’s properties – including the Eden Grand Resort in Thailand and its 50 percent share of New World Properties’ real estate assets in the Bahamas – are in escrow specifically until the company can issue its ICO.
Because the agreed-upon land swap is contingent on Unicoin going public, SEC investigators grilled company employees (even an intern) for hours, seemingly puzzled that anyone could create a company with real-world-asset backing dependent on issuance of the ICO.
“We tried to be the crypto poster kid of America – a public company whose financial leadership team showed its full hand, with a timetable for launching to build a long-term brand. But the SEC tried to force us into surrender for reasons we cannot even understand,” said Moschini.
No wonder nearly every cryptocurrency company had moved offshore during the Biden Administration’s campaign against all digital currencies.
It is the SEC, Moschini believes, not Unicoin, that has defrauded its investors. And all because Ney and his team of lawyers have no idea how to run a business and went berserk when they saw a business model that did not fit into their artificial mold.
Embarrassed by the 180-degree turnabout at the SEC under Trump, crypto czar David Sacks, Treasury Secretary Scott Bessent, and Atkins, the old guard at the SEC found a scalp they believed they could still take. But Ney did not count on the fact that most of Unicoin’s investors see this assault on their assets as baseless.
Oddly, on the day before the SEC charges were made public, SEC Commissioner Hester Peirce, who is heading up the agency’s Crypto Task Force, stated on “SEC Speaks” that “the Commission’s approach to crypto in recent years has evaded sound regulatory practice and must be corrected.” In her view, most currently existing crypto assets are not securities.
She added, “The Commission has relied on enforcement actions to tell people how it views the application of securities laws to crypto and as a substitute for notice-and-comment rulemaking. It has provided little useful guidance about how the securities laws apply under the facts and circumstances of crypto.”
Because, said Peirce, “the Commission’s approach to crypto did not work,” neither stopping the worst actors nor providing clarity for the good ones, “the fault lies with the Commission.”
Under the new leadership, the SEC will continue to vigorously pursue securities fraud, including in cases that involve crypto.
So one has to ask – were Commissioner Peirce, Chairman Atkins, and the entire Trump Administration convinced that Unicoin had committed fraud?
Or is this, as many suspect, Gensler’s “gangsters’s” last stand?
