The Securities and Exchange Commission's (SEC)'s new Cyber Unit set up in September to, among other things, regulate ICOs, initiated action against PlexCoin, which promised investors over 13x return within a month.
Obtaining an emergency asset freeze against Dominic Lacroix, whom it called a "recidivist Quebec securities law violator," and his partner Sabrina Paradis-Royer and PlexCorps, the SEC unit filed charges against LaCroix and PlexCorps alleging that they sold securities claiming investments in PlexCoin would fetch profits of 1,354 per cent in less than 29 days.
Since August, PlexCoin has raised $15 million from investors both in the US and other parts of the world. The price fell from 15 cents on Sunday to 5 cents according to Coinmarketcap.
"This first Cyber Unit case hits all of the characteristics of a full-fledged cyber scam and is exactly the kind of misconduct the unit will be pursuing," said Robert Cohen, Cyber Unit chief, in a statement. "We acted quickly to protect retail investors from this initial coin offering's false promises."
The action has been welcomed by longtime players in the crypto space. According to commentators, the ease with which a team could raise a huge sum through an ICO had started attracting characters who preyed upon everyday investors, with little understanding of the technology, hoping to cash in on the next Bitcoin or Ethereum.
"This is an escalation of [the SEC's] actions, and they are showing their intentions. It's a good signal for the market they will not tolerate abuses and scams," William Mougayar, organiser of The Token Summit conferences in New York and San Francisco, said in an email.
Although on Facebook, PlexCorps has garnered 10,350 "likes", the company has no whitepaper available on its website. In its latest Facebook post, Friday, it told "dear members" how PlexCoin was up 698.03 per cent at 73 cents on CoinMarketCap as far and away the top gainer. According to CoinMarketCap, PlexCoin was worth 8.5 cents yesterday.