SEC offers beam of hope to victims of PlexCoin crypto scam
There is some good news for investors harmed by fraudulent cryptocurrency scheme PlexCoin. This happens nearly three years after the United States Securities and Exchange Commission (SEC) launched an action against PlexCorps, aka PlexCoin, Dominic LaCroix, and Sabrina Paradis-Royer.
The aim of the action was to stop the defendants’ dissemination of a series of material false and misleading statements and the misappropriation of investor assets in connection with the illegal offering for unregistered securities known as PlexCoins through the PlexCoin Initial Coin Offering (ICO).
In its complaint, the SEC alleged that PlexCorps, and its proprietors Lacroix and Paradis-Royer, fraudulently raised millions of dollars in virtual and fiat currency from the unregistered sales of PlexCoin based on a series of false and misleading statements to potential and actual investors, including misrepresentations about the size and scale of PlexCorps’ operations, the use of funds raised in the PlexCoin ICO, and the amount of funds raised in the PlexCoin ICO.
On October 2, 2019, the New York Eastern District Court entered a final judgment against PlexCorps, Lacroix, and Paradis-Royer. Pursuant to the Final Judgment, the defendants are enjoined from further violations of Section 17(a) of the Securities Act, and Section 10(b) of the Exchange Act and Rule l0b-5 thereunder, and Lacroix and Paradis-Royer are additionally enjoined from violations of Sections 5(a) and 5(c) of the Securities Act and from participating in any digital-securities offerings.
All defendants were ordered to disgorge, on a joint and several basis, $4,563,468 in ill-gotten gains from the PlexCoin ICO plus $348,145 in prejudgment interest, and Lacroix and Paradis-Royer were ordered to each pay a $1,000,000 civil penalty.
The Final Judgment requires the defendants to forego their rights to the entirety of the investor funds seized by a receiver appointed by the Superior Court of Quebec, totaling approximately $4 million, as well as $800,000 in investor funds held by U.S.-based entities that were subject to an asset freeze issued by the District Court.
On January 31, 2020, the Receiver moved the Superior Court in Quebec, Canada, for a Declaratory Judgment. Now, the Canadian Court has reacted. Last night, the SEC has updated its webpage dedicated to the PlexCoin case.
The SEC says that, on October 29, 2020, the Honorable Daniel Dumais of the Superior Court of Canada, Province and District of Quebec, issued a judgment on the Receiver’s Declaratory Judgment request, declaring that:
- If and when sent to the Receiver for distribution, the frozen assets in the United States should be distributed to Plexcoin investors as currently defined in clause 1.1.13 of the Plan;
- The frozen assets in Quebec should be distributed to the creditors of Dominic Lacroix; and
- Neither distribution will be subject to a de minimis debt value of $250.
The Court further ordered the Receiver to adjust the Plan and present it to the Superior Court for authorization as soon as possible.
Although the claims process has not yet begun, Plexcoin investors can send their names and email contact information to the Receiver at firstname.lastname@example.org to ensure their inclusion in the claims solicitation process. The SEC notes that, in so doing, the investors should not include their claim documentation or any sensitive personal information; that information will be sought through the claims process once it has been approved.
The funds blocked in Quebec include:
- Cryptocurrency transferred to the administrator and converted into Canadian currencies ($4,441,964);
- Recovered debt from Groupe Giroux Maconnex inc. ($2,247);
- Sale of computer and mining equipment ($65,000);
- Interest income ($83,578);
- Balance of the RBC account of Sabrina Paradis-Royer ($1,121,226 USD and $265,395 CDN);
- Any other cryptocurrency that could be recovered.
The receiver explains that he will need to subtract the cost of all the provisional administration fees, as well as the future ones (nearly $2,000,000 in total) from these amounts. The distribution will thus comprise around $4,300,000.