Executive Summary
The recent lawsuit filed by the U.S. Securities and Exchange Commission (SEC) against Unicoin and its executives is not, despite surface appearances, a case about the peculiarities or legal uncertainties surrounding cryptocurrencies. Rather, it is a textbook example of securities fraud — one that could have been perpetrated using any financial instrument, be it stocks, bonds, or real estate securities. The fact that the fraudulent representations involved crypto assets is, in legal terms, incidental.
Read the FinTelegram on the SEC complaint against Unicoin here.
This opinion seeks to clarify a widespread misconception: not every case involving digital assets is inherently a “crypto fraud.” In the case at hand, the crypto component merely serves as the vehicle, not the substance, of the fraud.
I. Factual and Legal Background
On May 20, 2025, the SEC announced charges against Unicoin, Inc., its CEO Alex Konanykhin, former President Silvina Moschini, and former CIO Alex Dominguez. According to the SEC’s complaint:
“Unicoin and its executives engaged in a fraudulent scheme by making false and misleading statements in an offering of certificates that purportedly conveyed rights to receive crypto assets called Unicoin tokens and in an offering of Unicoin, Inc.’s common stock.”
The SEC further alleged:
- The company overstated the value of real estate assets that were claimed to back Unicoin tokens;
- The rights certificates sold to investors — promising delivery of tokens in the future — were largely “illusory”;
- The executives created a deceptive illusion of investor demand and financial backing.
II. Forensic Analysis of the Alleged Scheme
Let us break down the alleged fraud using a forensic lens:
| Component | Description |
|---|---|
| Instrument Used | Unicoin Rights Certificates + Common Stock |
| Underlying Asset | Purported real estate portfolio backing the Unicoin tokens |
| False Representations | Overstated real estate values; misrepresented future token delivery |
| Mechanism of Fraud | Sale of rights certificates and shares based on misleading asset claims |
| Investor Deception | Investors believed tokens were “asset-backed” and widely adopted |
What stands out in the SEC’s complaint is not the use of blockchain technology or the issuance of tokens — both now common mechanisms in the modern capital market — but rather the deliberate misrepresentation of underlying asset value, which is a hallmark of classic fraud under U.S. securities laws.
This same scheme could have been run using:
- Stock falsely claimed to be backed by profitable real estate holdings;
- Bond offerings where collateral was misrepresented;
- REITs that overstated property values and future returns.
Thus, the alleged wrongdoing lies not in the mechanics of crypto issuance, but in the deception of investors through materially false statements — the very conduct the securities laws were designed to prevent.
III. Legal Reasoning: Why This Is Not a “Crypto Fraud” Case
The term “crypto fraud” often implies that the fraud arises from the inherent nature of cryptocurrencies — such as their volatility, anonymity, or lack of regulation. That is not what is at issue here.
The fraud alleged by the SEC would remain legally identical even if:
- Unicoin had issued preferred shares instead of tokens;
- The certificates sold were convertible notes or options instead of crypto rights;
- The platform operated without any blockchain infrastructure.
At its core, the case hinges on intentional deception about asset backing, a violation of Section 17(a) of the Securities Act and Section 10(b) of the Exchange Act — the foundational anti-fraud provisions of U.S. securities law.
As the SEC itself stated in its press release:
“This case is not about crypto assets per se. It’s about lies told to investors about the value of the underlying business and its assets.”
IV. Legal Opinion and Conclusion
As a legal analyst with a background in financial regulation, I am compelled to state that the Unicoin case should not be interpreted as a referendum on cryptocurrency or blockchain technology. The use of crypto merely modernizes the packaging of a fraud that is centuries old: selling something under false pretenses.
In this instance:
- There was no meaningful asset backing for the token rights offered;
- Executives made objectively false statements about the value and status of these assets;
- Investors were induced to part with money based on those statements.
Whether delivered through digital tokens, printed share certificates, or smoke signals is legally immaterial — fraud remains fraud.
We must therefore avoid generalizing this enforcement action as indicative of a systemic problem in crypto. Instead, it should serve as a case study in how old frauds adapt to new technologies, and as a warning to regulators, investors, and legitimate blockchain companies alike: compliance is not optional, and deception — regardless of the delivery system — will be prosecuted.
Recommendation
Regulators should:
- Continue distinguishing between fraud-enabled-by-crypto and fraud-inherent-to-crypto;
- Encourage accurate disclosures and independent asset verification;
- Resist the urge to stigmatize legitimate crypto innovation due to high-profile enforcement cases involving bad actors.
