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Bitcoin Government Communications The Internet United States

Feds Shut Down Allegedly Fraudulent Cryptocurrency Offering (arstechnica.com) 47

An anonymous reader quotes a report from Ars Technica: The Securities and Exchange Commission on Monday announced that it was taking action against an initial coin offering (ICO) that the SEC alleges is fraudulent. The announcement represents the first enforcement action by the SEC's recently created cyber fraud unit. In July, the agency fired a warning shot. It announced that a 2016 fundraising campaign had run afoul of securities law, but that the SEC would decline to prosecute those responsible. The hope was to get the cryptocurrency world to take securities laws more seriously without doing anything drastic. Now the SEC is taking the next step by prosecuting what it considers to be one of the most egregious scams in the ICO world. The SEC's complaint, filed in federal court in New York, is against Dominic Lacroix, whom the SEC describes as a "recidivist securities law violator." The SEC considers Lacroix's cryptocurrency project, PlexCoin, to be a "fast-moving Initial Coin Offering (ICO) fraud that raised up to $15 million from thousands of investors since August by falsely promising a 13-fold profit in less than a month." The PlexCoin website has a hilariously vague description of this supposedly revolutionary cryptocurrency. "The PlexCoin's new revolutionary operating structure is safer and much easier to use than any other current cryptocurrency," the site proclaims. "One of the many features of PlexBank will be to secure your cryptocurrency from market variation, which is highly volatile, and invest your money in a place where you can get interesting guaranteed returns." According to Ars, "The SEC isn't impressed and is arguing that PlexCoin has 'all of the characteristics of a full-fledged cyber scam.' The agency is seeking to freeze the assets of the PlexCoin project in hopes of getting investors' funds back to them."

Feds Shut Down Allegedly Fraudulent Cryptocurrency Offering

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  • I have some BTC, LTC, Doge, XMR, etc.

    But almost all of those "initial coin offerings"? Stay away from those!

    • by rtb61 ( 674572 )

      So you bought into fake money, where the originators ground out something like fifty percent of the available coins, what, to make them rich? Watch out for the bitcoin bomb, it is bitcoin holders who are at the moment being set up to be mined for the real currency.

      • You didn't need to buy anything a few years ago, faucets gave a few thousand satoshis per request. Those days are long gone, though.

      • by Maritz ( 1829006 )

        Your point appears to be that things don't increase in value forever.

        Pretty fucking facile, obvious point. It appears to have risen higher than you ever thought possible.

        • by HiThere ( 15173 )

          Well, it has risen higher than I thought possible. But as it has no underpinnings so it can collapse totally. It probably won't, there are still people who buy tulips. But it wouldn't surprise me if it did. And it's already at the point where it's extravagantly expensive to operate.

  • It's pretty in two ways: pretty stupid, and pretty likely to stay that way.

  • by slashmydots ( 2189826 ) on Tuesday December 05, 2017 @09:11PM (#55685175)
    ICOs are illegal methods of commercial fundraiser in almost all countries and they're basically Kickstarter and GoFundMe but less reliable with less accountability and zero oversight. That is not an exaggeration, that is exactly how I describe it.
    • Re: (Score:3, Interesting)

      by Aighearach ( 97333 )

      Horse shit. The US is a significant country, and ICOs are totally legal here.

      What was illegal and fraudulent about this one was that they advertised returns that had no objective basis. If you want to promise return on investment, you have to have some sort of history to show, or at least some reasonable assumptions. If you just make up a crazy number and say people will earn that much you're gonna get the smackdown.

      The SEC is being very clear here; this case is about false promises.

      • by torkus ( 1133985 )

        I watched this one from the beginning...

        They talked it up left right and center. Can't imagine what they paid for advertising but it was significant as well.

        Their site promised all kinds of things besides the crazy return rates - the primary one being the ability to move money in and out via a 'plex card' which basically let you spend your plex coins as cash. Mind you, that's a great feature but not the easiest to implement (to say the least). Currently they're 'asking for beta testers' for 20ish of those

  • by Mr307 ( 49185 ) on Tuesday December 05, 2017 @11:07PM (#55685549)

    They are all some hybrid of a ponzi/pyramid/mlm scam.

    Certainly someone will come along and say how 'you dont know how they work, so you dont know what you are talking about'.

    And thats fine, but it appears that the scarcity feature isn't. When an infinite number of 'coins' can be made on a whim, anyone can make Super Bitcoin tomorrow then the day after the next brainiac can make Super Duper Bitcoin, then we'll get Super Ultra Duper Bitcoin(the bestest ever), and so on.

    So there is no overarching scarcity, yes there may be scarcity within a particular set but any set can be forked or duplicated with no restrictions, and new sets made to infinity. Any perceived value appears to have more to do with marketing, speculation and wishful thinking than anything 'real'.

    • Not really (Score:4, Insightful)

      by Interfacer ( 560564 ) on Wednesday December 06, 2017 @02:17AM (#55686007)

      Plenty of coin are scams or 'get rich quick' schemes that sponsor the developers of a crypto project. But scarcity is still assured because while there can be infinite coins, most of them are coins that people don't want, or want badly enough.

      Bitcoin will always be scarce. Having some schmuck mint another billion Doge coins on a whim is not going to affect scarcity at all because those are pretty much the equivalent of monopoly money compared to Euros or Dollars.

    • Some people need protection from themselves, and it is good to see SEC is trying to do just that.

      Cryptocurrencies in their current form is a hopeless project. It is completely unsuited for regular payment transactions, because you cannot hold bitcoin without also speculating. I want to be able to pay for goods and getting paid for work without having the value of my wallet fluctuating plus minus tens of percent points on a daily basis.

      As a financial investment instruments, it is completely hopeless as its

Matter will be damaged in direct proportion to its value.

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