Since taking office in January, the Trump Administration has staked out a crypto-friendly approach. It has advocated for stablecoin and crypto legislation to bring regulatory clarity to the industry to encourage innovation and allow markets to develop. Additionally, the Securities and Exchange Commission (SEC) under the Trump Administration has stayed or dismissed several cases that the previous administration brought against digital asset leaders, the Administration disbanded the Department of Justice's National Cryptocurrency Enforcement Team, and pardoned BitMEX.
But on May 20, 2025, with little fanfare, the SEC filed a complaint against Unicoin, Inc. (Unicoin) and certain of its executives in the United States District Court for the Southern District of New York alleging a $100 million "massive securities offering fraud." The question to consider is whether the Unicoin case reflects a position contrary to the Administration's pro-crypto stance. As we will describe below, it appears that there are limits to how crypto-friendly the SEC is willing to be. Where exactly are lines and how clear are they remains to be seen.
According to the SEC's complaint, from February 2022 to the present, Unicoin raised over $100 million from 5,000 investors by selling "Unicoin Rights Certificates," which promised rights to crypto assets called "Unicoin Tokens." The SEC claims that these sales were based on false and misleading statements and material omissions. First, Unicoin misrepresented that certificates were SEC-compliant and asset-backed by billions of dollars in real estate and equity interests in pre-IPO companies, when in fact the assets were never worth more than a fraction of the represented value and Unicoin never took title to most of those assets. Second, Unicoin falsely claimed that the tokens and certificates were "SEC-compliant," SEC-registered," or "U.S.-registered." Third, Unicoin overstated its sales of certificates and tokens. Finally, Unicoin falsely overstated the financial condition of the company. These misrepresentations were allegedly promoted through many avenues of advertisement, including paid promotional interviews, social media, TV ads, billboards, and events.
The question to consider is why Unicoin and how is this case different than any other offering case filed by the SEC in the past? The answer may be that the alleged wrongful conduct here goes far beyond a technical failure to file a registration and goes to the nature of the business and the related representations made. The Administration appears to be staking out its position that while prosecutions of mere regulatory violations are not favored, fraudulent statements and misrepresentations about crypto products and the business, couple with real harm to investors, will exceed the Administration's tolerance, even in a crypto-friendly environment.
It should be noted that the company and executives have publicly denied the SEC's allegations. Although General Counsel Richard Devlin settled the SEC's claims against him for a civil penalty of $37,500 without admitting or denying any allegations, CEO Alexander Konanykhin stated that the allegations made by the SEC are "blatantly false," and further stated, "I intend to prove in court that they constitute yet another case of gross abuse of power." Konanykhin rejected an offer from the SEC to settle the dispute. The company is preparing its defense and a spokesperson for the company has stated, "Unicoin, the only fully U.S.-registered, U.S.-regulated, U.S.-audited, and U.S.-publicly reporting cryptocurrency company, has consistently complied with all regulations."
It may be premature to draw any conclusions based on one case, but the question that we may be asking in the future is whether the SEC is drawing a hard line in the sand on false statements about the business, but not concerned about technical violations that were, in large measure, caused by the regulator itself.
Our collective experience is that we should expect to see an increase in fraud. As FOMO increases over the digital asset sector, bad actors will take advantage of investors.
The broader concern is that the SEC casts such a broad net that honest business are caught in the enforcement net of the regulators. Ultimately, in order to avoid this risk, entrepreneurs need to take compliance and regulation seriously. Projects and business models need to incorporate sound regulatory principles and best practices in order to demonstrate good faith and understanding. We will continue to monitor SEC enforcement and report new cases as they develop.
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