Lynn Johannson, Advisor, Sustainability and ESG
January 4th, 2024
Lynn Johannson, President of E2 Management Corporation and Catalyst for THE Collaboration
In a care[...]
Gensler’s Final Salvo as SEC Targets Unicoin in Crypto Clash
Enforcement | Dec 17, 2024
Image: Freepik/pikisuperstar
Unicoin Receives SEC Wells Notice During Gensler's Final Weeks at the SEC
As reported by Fortune, crypto tokenization and real-world-assets (RWA) juggernaut, Unicoin, received a Wells Notice from the SEC as they prepare for a major transition with new leadership direction. Yes, still turbulence in the industry with Gensler stepping down on January 20 and new SEC Chair, Paul Atkins, set to take over the helm. Unicoin CEO Alex Konanykhin indicated they will fight back against allegations of fraud and unregistered securities.
Unicoin’s Inability to Register Token as Security
Launched in 2015, Unicoin is a cryptocurrency that is backed by real-world assets like real estate, which gives the token a tangible value instead of the market relying solely on speculation. This helps reduce price volatility and attracts investors looking for more secure opportunities.
The company also marketed itself as the official cryptocurrency of a TV show called Unicorn Hunters where startups pitch to celebrity judges, which helped it gain a lot of visibility and approx 70,000 investors via $3.5 billion in token sales. Their popularity also attracted the SEC's attention. The Wells Notice accused Unicoin of both securities violations and also fraud which hasn't been included in recent SEC-driven crypto lawsuits.
See: Insights from the Tokenization Report Act of 2024 Hearing
Unicoin's CEO Konanykhin told Fortune that while the company has faced several SEC investigations this is the first time it has received a Wells Notice. Earlier this year, Unicoin agreed with the SEC to hold off on launching a public offering but chose to move forward with the company’s plans and launched its primary offering on a U.S. regulated trading platform INX.One after Trump's election victory and that Unicorn had publicly reported to the SEC for the past five years including recent paperwork signalling its intent to go public via a reverse merger.
With the pro-crypto advocate, Paul Atkins imminently replacing Gensler, Unicoin was banking that the regulatory environment would be more collaborative. At the end of the day, the firms inability to register their token as a security has left if vulnerable.
What This Means for Industry
Regulation won't change overnight and enforcement actions launched under Gensler will still be ongoing. Crypto companies should expect a more gradual shift to the SEC's regulatory approach and need to weather the storm during the transition.
See: 18 States Sue SEC for Regulatory Overreach on Crypto
Unicoin's Wells Notice also included allegations of fraud which raise the stakes. Companies should review and tighten their compliance efforts further. Linking crypto to real-world asset models indicate how tricky it is to align financial innovations within existing securities laws.
In Closing
As the SEC's leadership is in a transitional phrase, uncertainty still remains.
The National Crowdfunding & Fintech Association (NCFA Canada) is a financial innovation ecosystem that provides education, market intelligence, industry stewardship, networking and funding opportunities and services to thousands of community members and works closely with industry, government, partners and affiliates to create a vibrant and innovative fintech and funding industry in Canada. Decentralized and distributed, NCFA is engaged with global stakeholders and helps incubate projects and investment in fintech, alternative finance, crowdfunding, peer-to-peer finance, payments, digital assets and tokens, artificial intelligence, blockchain, cryptocurrency, regtech, and insurtech sectors. Join Canada's Fintech & Funding Community today FREE! Or become a contributing member and get perks. For more information, please visit: www.ncfacanada.org
 |  |  |
Support NCFA by Following us on Twitter!Follow @NCFACanada  |
Related Posts
Inflection point:Seven transformative shifts in US retail banking- “Is it a Crowd? Is it a Herd? Is it a Problem?” How Informed Startup (Crowd) Investors Really Are
- Amazon Responds To Rumors That It Is Integrating Bitcoin Payments On Its Platform
- State of Financial Services Industry Report 2020 (Oliver Wyman): When Vision and Value Collide
- How Companies Keep Their Most Popular Products Fresh
- ICOs can work for companies, Bank of Canada paper finds
Leave a Reply