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SEC Emergency Action Halts PlexCoin ICO

220 points by Permit 9y ago

Klathmon 9y ago
It might be useful to change the title to "SEC Emergency Action Halts an ICO Scam" Just clarifying that the emergency action is halting a single scam ICO and not halting all ICOs. For clarity, the original title (and the title of the linked article) was "SEC Emergency Action Halts ICO Scam"
- Permit 9y ago
  I've updated the title to try to be a little clearer on that point. (It confused me as well when I first saw it)
donquichotte 9y ago
> [The SEC] obtained an emergency asset freeze to halt 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. To me, the PlexCoin homepage [1] is indistinguishable from all the other ICO homepages I've seen. - bootstrap homepage: check - beautiful graphics with actors and coins: check - unclear statement what the company is or will do: check [1] https://www.plexcoin.com/ https://www.plexcoin.com/
- wlesieutre 9y ago
  > PlexCoin is the next decentralized worldwide cryptocurrency, based on the Ethereum structure. Its mission is to broaden the possibilities of uses and to increase the number of users by simplifying the process of managing cryptocurrency to the maximum. But they're going to simplify the process of managing cryptocurrency to the maximum!
  - Frogolocalypse 9y ago
    needs moar synergies!!
  - deleted 9y ago
    [deleted]
- ringaroundthetx 9y ago
  Its pretty low hanging fruit, the issuer was someone they had previously sancitoned and was probably prohibited from issuing Securities-like things for several years That and promising a particular return, no ambiguity on the expectation of profit, directly from the issuer!
- resonanttoe 9y ago
  I tend to agree. Every ICO page mainly struggles with number 3. I never get what they are selling, probably because they're not selling anything other than the idea of buying in to their ICO. Let's take a (somewhat snarky and definitely superficial) look at a few of the "top gainers" & market cap from https://coinmarketcap.com/gainers-losers/ https://coinmarketcap.com/gainers-losers/ (as of Dec 2nd) Gainers: 1. Petrodollar.. Website isn't even an owned domain. 2. BTCMoon - Well their website works, but it speaks just heavily of the token offering not what it does. Personally I like the first question in the FAQ: "Q: Why BTCMoon are there? " Which is as close to the pseudo-philosophical question of "why is the moon" as we can get. 3.iQuant - Nearest I can tell, a blockchain trading platform. They're the closest to actually telling me something, but their ICO ended so maybe thats why. Market cap. 1. EOS - Just talks about the ICO offering over and over. No idea 2. OmiseGo - "OmiseGO is a public Ethereum-based financial technology for use in mainstream digital wallets, that enables real-time, peer-to-peer ...." I'm sorry we've reached our buzzword quota for the day. 3. Tether.. Well we'll leave that one where it lands. Ok so its super snarky and highly superficial, but in all cases, the basic question of "What are you selling" isn't answered clearly and concisely. I just don't get it but if the requirement is either; A. Drink the ICO cool-aid and you'll get it B. "You have to think beyond how they'll sell to consumers, these are like platforms with boundless potential" Then I don't want to get it, because ambiguity is definitely something investors should avoid.
  - verroq 9y ago
    Tether is not an ICO and quite clear what it does. It is supposed to be a token that pegged to USD to facilitate the moving of USD via the blockchain instead of having to bother with the pain and fees of banks. Its market cap rises as more USD is deposited into their banks.
    - alwaysnotright 9y ago
      Sadly there is a lot of red flags indicating that this is not the case, they haven't had banking since April so there are no way to deposit funds to them for regular users at least. Also, one employee from Bitfinex suggested on reddit that Tether is funded by crypto deposit to them and not USD...
- chinathrow 9y ago
  Some more checks done: - Roadmap: check They're missing the Whitepaper and Telegram group though. I assume the later would be used to pump the ICO.
- Zarath 9y ago
  This is indistinguishable... really? This is so obviously a scam it hurts. The first sentence doesn't even make sense, let alone have proper grammar.
  - abraae 9y ago
    Maybe they adopted the same strategy as those Nigerian 419 scams. The tortured grammar drives away rational punters, leaving only the patsies.
  - josu 9y ago
    >The first sentence doesn't even make sense, let alone have proper grammar. Sadly this is the case for many "legitimate" ICOs. Understand legitimate as non-fraudulent.
- Flott 9y ago
  At first they were even using Visa logo, promising a Visa card that would use Plexcoins. They never even contacted Visa. A redditor eventually warned Visa about this and they required Plexcorp / DL Innov / Dominic Lacroix to remove all mention of Visa.
- tomc1985 9y ago
  Lots of subtle issues with grammar and voice too...
- goialoq 9y ago
  Seems like a 419-style thing -- it's designed to scare sophisticated investors away, and attract only rubes.
- Erlich_Bachman 9y ago
  This kind of says more about your ability to judge businesses (and specifically ICOs). Not a big surprise, considering that judging businesses and valuating them is a a profession in itself, and it takes people many years to become proficient in it. If you cannot get even a glimpse from this webpage, that this specific ICO is likely a scam, you should not invest in ICOs. You will likely not be able to tell which ones (the 1 out of 100) are likely legit, have serious people behind them, and on top of that have an actual sound idea that has a good chance of working. But it's kinda the same with stocks.
  - Frogolocalypse 9y ago
    No it isn't. You can create an ICO with a github account and dodgy php. To create a company and list it, it is a wee bit more complex.
    - Erlich_Bachman 9y ago
      You don't have to list it in order to scam people with it. They can buy stocks even in non-listed companies. At least not listed on major exchanges. While it might be easier to make a compelling ICO, registering a scammy company is also relatively easy (1k-2k USD). Or perhaps a bit more if you want to come up with some questionable tech and defraud some VCs with experience. It has been done, it is still being done. Up to this point it has been somewhat harder to get away with it though. Now hopefully it will be harder to get away with a scam ICO too. The point is, if you are out there trying to invest your money, and you don't have any idea about how to judge people, how to judge business models, how to judge the underlying tech - you will loose money. Whether it's an ICO or a regular company selling it's equity using traditional methods.
      - Frogolocalypse 9y ago
        And that is why securities are regulated.
- kuyan 9y ago
  It looks like the site is down. Here's a mirror: https://web.archive.org/web/20171204230017/https://www.plexcoin.com/ https://web.archive.org/web/20171204230017/https://www.plexc...
- Balgair 9y ago
  Zhang should really update the page for the 'block-chain-coins' era: http://tiffzhang.com/startup/?s=785536181453 http://tiffzhang.com/startup/?s=785536181453
- tstyle 9y ago
  It sounds like the key difference from the typical ICO page is the promise of a 13 fold return. I'm curious to see how they managed to phrase the promise, but it seem to have been removed from the page.
- wils1245 9y ago
  Their slogan is pretty funny: "The next cryptocurrency." Like the last one, only newer.
im3w1l 9y ago
So iiuc, the problem was that they promised a given profit in a given timeframe?
finkin1 9y ago
> PlexCorps marketed and sold securities called PlexCoin on the internet to investors in the U.S. and elsewhere, claiming that investments in PlexCoin would yield a 1,354 percent profit in less than 29 days. Is this claim the crux of the securities violation?
- quirkot 9y ago
  It's effectively putting knowingly false information in your prospectus. I think that it is the crux, but IANAL
  - finkin1 9y ago
    Right, I get that, but it seems like that statement is the only reason the SEC is halting the ICO. Seems like an incredibly idiotic statement to be making when selling a security. Would the ICO have gone off fine if they hadn't made such a ridiculous statement? I guess it could be argued without such a statement they wouldn't have raised as much money, but my guess is that they could had just hedged the statement to comply with securities laws. Seems like an incredibly dumb oversight, and anyone who knows about securities would have been able to see how dumb and risky making a statement like that is.
    - philipwhiuk 9y ago
      If you're making your first steps to regulate an industry you start with the low hanging fruit.
    - quirkot 9y ago
      I guess the take away is that if you're offering a security to the general public, don’t break the law and you won’t get shut down.
KasianFranks 9y ago
This is really good to see. Separating the scam ICOs from the non-scam ICOs is only going to become more important in the future.
- root_axis 9y ago
  I can't envision a future where they are anything but a scam. The tokens have no legal or economic connection to any business activity produced by the token creators so I don't see why any ICO token would be worth any more than any other besides hype.
  - pavel_lishin 9y ago
    They seem like Kickstarter bred with stocks - mostly an unenforceable promise of future products/services/magic to the users who buy the initial coins. An employee where I work recommended we do our own ICO, but for the life of me, I couldn't figure out what it was that the coins would eventually be exchanged for. Maybe I'm just too dumb - he's objectively smarter than me, I'll freely admit - but it seemed not too different from shaking a cup to passersby.
    - joosters 9y ago
      This flaw has not stopped many ICOs!
    - root_axis 9y ago
      Yeah, being very smart doesn't seem to be an effective inoculant against blockchain hysteria. Then again, the ICO scammers are making millions and I'm not, so, maybe I'm getting ahead of myself.
    - deleted 9y ago
      [deleted]
  - tekromancr 9y ago
    Sort of. For situations where the coin represents some ambiguous "share" of the project, absolutely. However, when the tokens are used as an incentive mechanism for a fledgling decentralized network, I think it makes a bit more sense. Things like Sia or Storj or Ether or Ark where the token is there to function as a cost/reward for using/providing the service that the network provides (filestorage, smart contracts, decentralized cryptocurrency exchange) I believe that it actually does have some intrinsic value.
deleted 9y ago
[deleted]
hectorr1 9y ago
Good. The first step to establishing a regulatory framework is defining boundaries of acceptable behavior by shutting down egregious violations.
- libertymcateer 9y ago
  What about the folks who love cryptocurrency specifically because of the fact it is unregulated? Are we not doing that anymore?
  - fragsworth 9y ago
    "Regulation" isn't a one-dimensional thing. You can simultaneously hate scam ICOs and still not want most other aspects of cryptocurrencies to be regulated. There are lots of different regulations that different people find acceptable.
    - libertymcateer 9y ago
      I agree - I'm an attorney. But are we picking and choosing here? Because my bet is, and has been for quite sometime, that when all is said and done, the 'regulations' we are talking about are those that already exist and are applied to securities.
      - quirkot 9y ago
        Yes, we are picking and choosing. We’re picking out individuals that are motivated to love unregulated financial instruments because it’s easier to defraud the populace and choosing to shut them down
      - hectorr1 9y ago
        I'm sure that most of securities law will apply, but there might be new opportunities provided by the tech that need to be worked out - for instance funding protocol development. The innovation also might also shift political attention to some drawbacks with the current regulatory regime that could use updating - for instance the rather blunt instrument of the accredited investor regime, or the custodian requirement. And the regulators will have to deal with changes to their own incentive structures - for instance the opportunity for regulatory arbitrage. For all the mistrust of banks and regulators in Bitcoinland, having those institutions take you seriously is what winning looks like.
gruez 9y ago
if the company's in quebec, how were they able to freeze their assets? did the company have exchange accounts in US? does the SEC have some sort of agreement with the canadians?
- chroem- 9y ago
  I would also like to know more about this. Could anyone with experience in the area please explain?
- fudged71 9y ago
  My understanding is Canada doesn't have a federal equivalent of the SEC, but there are provincial bodies for the same purpose. I assume SEC reached out to the quebec securities group and quebec was convinced enough to take action?
- Flott 9y ago
  I don't know for sure. All I know is that the AMF (Autorité des Marchés Financiers, Quebec "equivalent" of the SEC) froze Dominic Lacroix assets on Jun 13 2017[0]. Yet, his employees were still getting paid and he launched Plexcoin even if a court order was forbidding him to do so. Maybe the AMF had information about accounts in USA and tipped the SEC? [0] https://lautorite.qc.ca/en/general-public/media-centre/news/fiche-dactualites/dominic-lacroix-regis-roberge-dl-innov-inc-micro-prets-inc-et-gap-transit-inc-sont-vises-par-pl/ https://lautorite.qc.ca/en/general-public/media-centre/news/... EDIT: More information: The court order preventing him to launch Plexcoin was issued on July 20[1]. He did not comply and was charged for court contempt in September. The court found him guilty on oct 17 2017[2]. [1] https://lautorite.qc.ca/en/general-public/media-centre/news/fiche-dactualites/monnaie-virtuelle-plexcorps-plexcoin-dl-innov-inc-gestio-inc-et-dominic-lacroix-sont-vises-pa/ https://lautorite.qc.ca/en/general-public/media-centre/news/... [2] French only - https://lautorite.qc.ca/grand-public/salle-de-presse/actualite/fiche-dactualite/dossier-plexcoin-dominic-lacroix-et-dl-innov-inc-coupables-doutrage-au-tribunal/ https://lautorite.qc.ca/grand-public/salle-de-presse/actuali...
- Erlich_Bachman 9y ago
  Because they are US ;). How were they able to bring down btc-e, owned by foreign citizens, employing foreign citizens, registered in a foreign country? US are playing by their own rules, and so far they have made the world to just eat it.
JavaTheScript 9y ago
"Its mission is to broaden the possibilities of uses and to increase the number of users by simplifying the process of managing cryptocurrency to the maximum." ...clear as mud, where do I sign?
nikolay 9y ago
All ICOs should be banned! When you see all these scams around, you start appreciating regulation, law, and order more! I am not sure why so many engineers today are into anarchy when it's entirely against the basis of computer science and engineering in general! I get the idea about the distributed systems for higher resilience, but going against the merits of states and governments is just childish!
- juicyfroot 9y ago
  Ethereum was an ICO and so was Bitcoin. Ban those too?
- jsloss 9y ago
  Ah yes, how dare we poke and prod at the validity of current governmental systems and regulations. That feudal era was such great times, if we had only not gone against the merits of the government of the day./s There is little doubt that many ICO's are 'scams', and some people will get hurt financially because of it. The challenge with regulations is, it's easy to quantify the harm they try to stop, but it's harder understand the impact they have on limiting future creation / innovation etc. Tokens / ICO's have created a whole new, far more accessible way to fund and invest in new technology. Making it far more equal, fast, open and liquid than the traditional process. Regulation is coming, as it should. I just hope it's done with an eye for encouraging the right type action, rather than just trying to stop the wrong.
  - nikolay 9y ago
    There's no perfect system, but what we have right now is better than anything from the past, and it's only getting better. Anyway, I think under-regulation is worse than over-regulation.
    - stale2002 9y ago
      And it will get better BECAUSE people are trying crazy new things, like ICOs. Sure, there are problems, as with all new things. But the problems will be fixed eventually, and the legal system with be better because of it. People doing something weird, and different and new and probably illegal, is THE way that our legal system gets better, as we learn to deal with new things, that might be bad OR good. And decide whether these illegal things should stay illegal, or become legal.
modeless 9y ago
People might not be so eager to dump money into these scam investments if the government hadn't strangled legal and regulated equity crowdfunding. The SEC needs to look at ways to allow people to invest in legitimate opportunities, not just shut down scams. The JOBS act has been a bust in this regard as far as I can see.
- notfromhere 9y ago
  That's just trading one problem for another. We'd just see a big increase in equity crowdfunding scams instead
- cwperkins 9y ago
  There's pretty sound reasons why non-accredited investors can only invest in public tradable assets. Accredited investors can get into non-public companies if they earn a high enough income such that they can take that kind of volatility. For students fresh out of college that should focus on saving, it is not a great idea to throw those savings into non-public startups. It sure sounds tempting, but many times over has been shown to be the most risky asset class.
  - ficklepickle 9y ago
    It could be argued that a student has lots of earning potential left in their life, so their risk tolerance is actually higher than someone, say, near retirement on a fixed income. I get what you are saying though. For most people it is not an appropriate investment, hence the accredited investor rules.
  - cableshaft 9y ago
    People should be allowed to make risky investments if they want, especially if they keep that risk to a small percentage of their portfolio. Besides, the lotto and casinos exist and are still allowed in most places, which is basically what you're leaving these people to do (and what I've seen many younger people waste their money instead). Isn't it this very website where people over and over again say that the best time to take a risk is when you're young, anyway, and don't have any responsibilities? There's a difference between risky investments and outright scams, though, and I'm fine if the government steps in and stops the scams, although I worry that they'll start seeing every single ICO as a scam and want to stop all of them (to be fair, it almost seems like they all are right now to me as well). That's one of the nice things about the rise of cryptocurrencies, actually, is it's allowed younger people to make bets that have wildly paid off for them, that would otherwise not been available to them. It was risky as hell for sure, but for those people that only put in what they could afford to lose, it's outperformed every other investment by many many times this past year.
Animats 9y ago
This is a typical SEC action against a get-rich-quick Ponzi-type scheme. Read the SEC's note on Ponzi schemes.[1] The original Charles Ponzi only promised a 50% return in 90 days. Bernie Madoff promised about 10-15% a year. This "ICO" promised 1300% in 30 days. [1] https://www.sec.gov/fast-answers/answersponzihtm.html https://www.sec.gov/fast-answers/answersponzihtm.html
- brudgers 9y ago
  If you can get in early and you recognize it for what it is, a Ponzi scheme can be just another rational investment. Madoff's clients made good returns for a long time. From the perspective of each long term individual investor, the problem was that they did not fold and walk away from the table with their winnings after a few years. The scheme would have survived a few of those, and maybe some investors did. None of which is to imply that I think Ponzi schemes should be legal. I'm not a libertarian.
  - deleted 9y ago
    [deleted]
  - Animats 9y ago
    Only if they actually pay out withdrawals.
    - brudgers 9y ago
      True any time you hand over a pile of money with the expectation that the recipient will give you more back.
NelsonMinar 9y ago
It's worth noting the SEC describes the perpetrator as "a recidivist Quebec securities law violator". Apparently this isn't the first scam he's run.
- joering2 9y ago
  Did not know SEC has jurisdiction over Canada, thanks.
  - Kalium 9y ago
    They're not claiming it. They're noting that the person in question has a history of securities law violations.
crooked-v 9y ago
"PlexCoin" also seems like a name likely to run into trademark issues with the makers of the media management/DVR software Plex (plex.tv).
- stale2002 9y ago
  That's not really how trademark works. It is only similar/same industries where that applies. The rule of thumb is consumer confusion. Is an average person going to mix up the 2? In this case, the answer is likely No.
  - pessimizer 9y ago
    > Is an average person going to mix up the 2? Isn't the standard "a moron in a hurry"?
  - awad 9y ago
    Given the state of the market these days before clicking in to the article I actually assumed the Plex Media folks were getting in on ICO madness
- Negitivefrags 9y ago
  I would think EVE Online would have a much stronger case. They already have a digital currency called PLEX.
joering2 9y ago
Okay so I will play the Devils advocate here. They have good intentions and basically shrug off bad publicity and continue with their project. Then SEC step in shutting them down and bankrupting them before even charges were filled or they had their chance to defend themselves. Now moving forward months/years later they lack of funds or bad publicity made it they are forced to go down. So yeah in such scenario public and SEC will always be correct it was a scam :) every single time - just cut off founders hands, throw a fine, maybe jail time. Im sure its hard to meet potential business partners, make presentations or sales, when you behind bars.
- philipwhiuk 9y ago
  The guy's already facing contempt of court charges in Canada. This is more preventing people running with the money.
spondyl 9y ago
I'd be fascinated to see a documentary that followed the launch of an ICO just to see what sort of headspace they're in.
- shepardrtc 9y ago
  Scam artists have been around since we developed intelligence. These ones are just a little more high-tech.
Frogolocalypse 9y ago
This is going to happen a lot methinks.
hamstercat 9y ago
The AMF had already found him guilty of the same and barred him from soliciting, directly or indirectly, investors for PlexCoin [0]. It's not the first time he gets in trouble, he had a lending "company" that was investigated and was barred from participating anymore [1]. All links in French sorry. [0]: https://lautorite.qc.ca/grand-public/salle-de-presse/actualite/fiche-dactualite/dossier-plexcoin-dominic-lacroix-et-dl-innov-inc-coupables-doutrage-au-tribunal/ https://lautorite.qc.ca/grand-public/salle-de-presse/actuali... [1]: https://lautorite.qc.ca/grand-public/salle-de-presse/actualite/fiche-dactualite/dominic-lacroix-regis-roberge-dl-innov-inc-micro-prets-inc-et-gap-transit-inc-sont-vises-par-pl/ https://lautorite.qc.ca/grand-public/salle-de-presse/actuali...
- ShroudedNight 9y ago
  This appears to be an English version of [1]: https://lautorite.qc.ca/en/general-public/media-centre/news/fiche-dactualites/orders-issued-against-dominic-lacroix-regis-roberge-dl-innov-inc-micro-prets-inc-and-gap-transi/ https://lautorite.qc.ca/en/general-public/media-centre/news/...
hectorr1 9y ago
For those interested in a little light reading on the subject of Securities Law and Crypto Assets: https://coincenter.org/entry/framework-for-securities-regulation-of-cryptocurrencies https://coincenter.org/entry/framework-for-securities-regula... https://coincenter.org/entry/a-securities-law-framework-for-blockchain-tokens https://coincenter.org/entry/a-securities-law-framework-for-...
gregdoesit 9y ago
Plexcoin, summarized: >"Security is very important to us. That's why we invented a new type of encryption system based on your private virtual currency address, so it is unencyptable." Come up with a new encryption system and tell the world it's unencryptable... I'll just leave this one hanging. Source: Plexcoin blog (https://www.plexcoin.com/blog/important-statement https://www.plexcoin.com/blog/important-statement)
- gitgud 9y ago
  Well, it says "undecryptable" now... ".... based on your private virtual currency address, so it is undecryptable." But that makes me think it cannot be decrypted, which is pretty bad for an encryption system. If you cannot decrypt the data, it might as well be random noise ...
  - yebyen 9y ago
    Even if this statement is pristine, it's still pretty flagrant: > August 10, 13h00 GMT > We implement a unique encryption system that uses a portion of your private PlexCoin address to encrypt your email address, your password and your wallet. Security is very important to us. That's why we invented a new type of encryption system based on your private virtual currency address, so it is undecryptable. I mean, even in context, what does this mean? "Security is very important to us."
toomanybeersies 9y ago
We had a similar thing happen a week or so ago in New Zealand, with the Financial Markets Authority warning against an ICO: http://www.nzherald.co.nz/business/news/article.cfm?c_id=3&objectid=11947186 http://www.nzherald.co.nz/business/news/article.cfm?c_id=3&o... The ICO was later withdrawn: http://www.nzherald.co.nz/business/news/article.cfm?c_id=3&objectid=11948672 http://www.nzherald.co.nz/business/news/article.cfm?c_id=3&o... Basic rundown: 19 year old "serial entrepreneur" buys a Carosell [0] (similar to craigslist) clone script for a couple of grand (apparently he claimed to have made it himself), claims to have millions of users after a couple of months, and then tries to launch an ICO. It was a blatant scam, he was called out for it, and ended up cancelling the ICO, and promising to return all the money. [0] https://en.wikipedia.org/wiki/Carousell_(company) https://en.wikipedia.org/wiki/Carousell_(company)
jeffdo 9y ago
Website redirects me to this url: https://cdn01.plexcoin.com/403.html https://cdn01.plexcoin.com/403.html Sketchy to say the least.
willsr 9y ago
From their FAQ: "Is it safe? The cryptocurrency is currently the safest currency. Unlike cash, you cannot lose it or have it robbed. No bank will be able to validate your transactions or to take fees on your transactions. It's your money and no one will be able to scrutinize your operations." People bought this?
wallacoloo 9y ago
So what actions did the SEC actually take? It's an Ethereum token, right? So even if the SEC froze the creator's assets, they can't prevent others from still trading the token. They haven't completely closed the on-ramps for the token, then, since new "investors" can still purchase them in exchange for some other token. I guess they've just halted the creation of new tokens and the advertisement of the token by its creator? So what happens to all the existing investors? Does the SEC (or another entity) buy back their tokens with the seized funds? Clearly, I haven't dealt with ICOs before, nor do I understand much of how the SEC operates.

220 points by Permit 9y ago

It might be useful to change the title to "SEC Emergency Action Halts an ICO Scam" Just clarifying that the emergency action is halting a single scam ICO and not halting all ICOs. For clarity, the original title (and the title of the linked article) was "SEC Emergency Action Halts ICO Scam"

Permit 9y ago
I've updated the title to try to be a little clearer on that point. (It confused me as well when I first saw it)

donquichotte 9y ago

> [The SEC] obtained an emergency asset freeze to halt 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. To me, the PlexCoin homepage [1] is indistinguishable from all the other ICO homepages I've seen. - bootstrap homepage: check - beautiful graphics with actors and coins: check - unclear statement what the company is or will do: check [1] https://www.plexcoin.com/ https://www.plexcoin.com/

wlesieutre 9y ago
> PlexCoin is the next decentralized worldwide cryptocurrency, based on the Ethereum structure. Its mission is to broaden the possibilities of uses and to increase the number of users by simplifying the process of managing cryptocurrency to the maximum. But they're going to simplify the process of managing cryptocurrency to the maximum!
- Frogolocalypse 9y ago
  needs moar synergies!!
- deleted 9y ago
  [deleted]
ringaroundthetx 9y ago
Its pretty low hanging fruit, the issuer was someone they had previously sancitoned and was probably prohibited from issuing Securities-like things for several years That and promising a particular return, no ambiguity on the expectation of profit, directly from the issuer!
resonanttoe 9y ago
I tend to agree. Every ICO page mainly struggles with number 3. I never get what they are selling, probably because they're not selling anything other than the idea of buying in to their ICO. Let's take a (somewhat snarky and definitely superficial) look at a few of the "top gainers" & market cap from https://coinmarketcap.com/gainers-losers/ https://coinmarketcap.com/gainers-losers/ (as of Dec 2nd) Gainers: 1. Petrodollar.. Website isn't even an owned domain. 2. BTCMoon - Well their website works, but it speaks just heavily of the token offering not what it does. Personally I like the first question in the FAQ: "Q: Why BTCMoon are there? " Which is as close to the pseudo-philosophical question of "why is the moon" as we can get. 3.iQuant - Nearest I can tell, a blockchain trading platform. They're the closest to actually telling me something, but their ICO ended so maybe thats why. Market cap. 1. EOS - Just talks about the ICO offering over and over. No idea 2. OmiseGo - "OmiseGO is a public Ethereum-based financial technology for use in mainstream digital wallets, that enables real-time, peer-to-peer ...." I'm sorry we've reached our buzzword quota for the day. 3. Tether.. Well we'll leave that one where it lands. Ok so its super snarky and highly superficial, but in all cases, the basic question of "What are you selling" isn't answered clearly and concisely. I just don't get it but if the requirement is either; A. Drink the ICO cool-aid and you'll get it B. "You have to think beyond how they'll sell to consumers, these are like platforms with boundless potential" Then I don't want to get it, because ambiguity is definitely something investors should avoid.
- verroq 9y ago
  Tether is not an ICO and quite clear what it does. It is supposed to be a token that pegged to USD to facilitate the moving of USD via the blockchain instead of having to bother with the pain and fees of banks. Its market cap rises as more USD is deposited into their banks.
  - alwaysnotright 9y ago
    Sadly there is a lot of red flags indicating that this is not the case, they haven't had banking since April so there are no way to deposit funds to them for regular users at least. Also, one employee from Bitfinex suggested on reddit that Tether is funded by crypto deposit to them and not USD...
chinathrow 9y ago
Some more checks done: - Roadmap: check They're missing the Whitepaper and Telegram group though. I assume the later would be used to pump the ICO.
Zarath 9y ago
This is indistinguishable... really? This is so obviously a scam it hurts. The first sentence doesn't even make sense, let alone have proper grammar.
- abraae 9y ago
  Maybe they adopted the same strategy as those Nigerian 419 scams. The tortured grammar drives away rational punters, leaving only the patsies.
- josu 9y ago
  >The first sentence doesn't even make sense, let alone have proper grammar. Sadly this is the case for many "legitimate" ICOs. Understand legitimate as non-fraudulent.
Flott 9y ago
At first they were even using Visa logo, promising a Visa card that would use Plexcoins. They never even contacted Visa. A redditor eventually warned Visa about this and they required Plexcorp / DL Innov / Dominic Lacroix to remove all mention of Visa.
tomc1985 9y ago
Lots of subtle issues with grammar and voice too...
goialoq 9y ago
Seems like a 419-style thing -- it's designed to scare sophisticated investors away, and attract only rubes.
Erlich_Bachman 9y ago
This kind of says more about your ability to judge businesses (and specifically ICOs). Not a big surprise, considering that judging businesses and valuating them is a a profession in itself, and it takes people many years to become proficient in it. If you cannot get even a glimpse from this webpage, that this specific ICO is likely a scam, you should not invest in ICOs. You will likely not be able to tell which ones (the 1 out of 100) are likely legit, have serious people behind them, and on top of that have an actual sound idea that has a good chance of working. But it's kinda the same with stocks.
- Frogolocalypse 9y ago
  No it isn't. You can create an ICO with a github account and dodgy php. To create a company and list it, it is a wee bit more complex.
  - Erlich_Bachman 9y ago
    You don't have to list it in order to scam people with it. They can buy stocks even in non-listed companies. At least not listed on major exchanges. While it might be easier to make a compelling ICO, registering a scammy company is also relatively easy (1k-2k USD). Or perhaps a bit more if you want to come up with some questionable tech and defraud some VCs with experience. It has been done, it is still being done. Up to this point it has been somewhat harder to get away with it though. Now hopefully it will be harder to get away with a scam ICO too. The point is, if you are out there trying to invest your money, and you don't have any idea about how to judge people, how to judge business models, how to judge the underlying tech - you will loose money. Whether it's an ICO or a regular company selling it's equity using traditional methods.
    - Frogolocalypse 9y ago
      And that is why securities are regulated.
kuyan 9y ago
It looks like the site is down. Here's a mirror: https://web.archive.org/web/20171204230017/https://www.plexcoin.com/ https://web.archive.org/web/20171204230017/https://www.plexc...
Balgair 9y ago
Zhang should really update the page for the 'block-chain-coins' era: http://tiffzhang.com/startup/?s=785536181453 http://tiffzhang.com/startup/?s=785536181453
tstyle 9y ago
It sounds like the key difference from the typical ICO page is the promise of a 13 fold return. I'm curious to see how they managed to phrase the promise, but it seem to have been removed from the page.
wils1245 9y ago
Their slogan is pretty funny: "The next cryptocurrency." Like the last one, only newer.

im3w1l 9y ago

So iiuc, the problem was that they promised a given profit in a given timeframe?

finkin1 9y ago

> PlexCorps marketed and sold securities called PlexCoin on the internet to investors in the U.S. and elsewhere, claiming that investments in PlexCoin would yield a 1,354 percent profit in less than 29 days. Is this claim the crux of the securities violation?

quirkot 9y ago
It's effectively putting knowingly false information in your prospectus. I think that it is the crux, but IANAL
- finkin1 9y ago
  Right, I get that, but it seems like that statement is the only reason the SEC is halting the ICO. Seems like an incredibly idiotic statement to be making when selling a security. Would the ICO have gone off fine if they hadn't made such a ridiculous statement? I guess it could be argued without such a statement they wouldn't have raised as much money, but my guess is that they could had just hedged the statement to comply with securities laws. Seems like an incredibly dumb oversight, and anyone who knows about securities would have been able to see how dumb and risky making a statement like that is.
  - philipwhiuk 9y ago
    If you're making your first steps to regulate an industry you start with the low hanging fruit.
  - quirkot 9y ago
    I guess the take away is that if you're offering a security to the general public, don’t break the law and you won’t get shut down.

KasianFranks 9y ago

This is really good to see. Separating the scam ICOs from the non-scam ICOs is only going to become more important in the future.

root_axis 9y ago
I can't envision a future where they are anything but a scam. The tokens have no legal or economic connection to any business activity produced by the token creators so I don't see why any ICO token would be worth any more than any other besides hype.
- pavel_lishin 9y ago
  They seem like Kickstarter bred with stocks - mostly an unenforceable promise of future products/services/magic to the users who buy the initial coins. An employee where I work recommended we do our own ICO, but for the life of me, I couldn't figure out what it was that the coins would eventually be exchanged for. Maybe I'm just too dumb - he's objectively smarter than me, I'll freely admit - but it seemed not too different from shaking a cup to passersby.
  - joosters 9y ago
    This flaw has not stopped many ICOs!
  - root_axis 9y ago
    Yeah, being very smart doesn't seem to be an effective inoculant against blockchain hysteria. Then again, the ICO scammers are making millions and I'm not, so, maybe I'm getting ahead of myself.
  - deleted 9y ago
    [deleted]
- tekromancr 9y ago
  Sort of. For situations where the coin represents some ambiguous "share" of the project, absolutely. However, when the tokens are used as an incentive mechanism for a fledgling decentralized network, I think it makes a bit more sense. Things like Sia or Storj or Ether or Ark where the token is there to function as a cost/reward for using/providing the service that the network provides (filestorage, smart contracts, decentralized cryptocurrency exchange) I believe that it actually does have some intrinsic value.

deleted 9y ago

[deleted]

hectorr1 9y ago

Good. The first step to establishing a regulatory framework is defining boundaries of acceptable behavior by shutting down egregious violations.

libertymcateer 9y ago
What about the folks who love cryptocurrency specifically because of the fact it is unregulated? Are we not doing that anymore?
- fragsworth 9y ago
  "Regulation" isn't a one-dimensional thing. You can simultaneously hate scam ICOs and still not want most other aspects of cryptocurrencies to be regulated. There are lots of different regulations that different people find acceptable.
  - libertymcateer 9y ago
    I agree - I'm an attorney. But are we picking and choosing here? Because my bet is, and has been for quite sometime, that when all is said and done, the 'regulations' we are talking about are those that already exist and are applied to securities.
    - quirkot 9y ago
      Yes, we are picking and choosing. We’re picking out individuals that are motivated to love unregulated financial instruments because it’s easier to defraud the populace and choosing to shut them down
    - hectorr1 9y ago
      I'm sure that most of securities law will apply, but there might be new opportunities provided by the tech that need to be worked out - for instance funding protocol development. The innovation also might also shift political attention to some drawbacks with the current regulatory regime that could use updating - for instance the rather blunt instrument of the accredited investor regime, or the custodian requirement. And the regulators will have to deal with changes to their own incentive structures - for instance the opportunity for regulatory arbitrage. For all the mistrust of banks and regulators in Bitcoinland, having those institutions take you seriously is what winning looks like.

gruez 9y ago

if the company's in quebec, how were they able to freeze their assets? did the company have exchange accounts in US? does the SEC have some sort of agreement with the canadians?

chroem- 9y ago
I would also like to know more about this. Could anyone with experience in the area please explain?
fudged71 9y ago
My understanding is Canada doesn't have a federal equivalent of the SEC, but there are provincial bodies for the same purpose. I assume SEC reached out to the quebec securities group and quebec was convinced enough to take action?
Flott 9y ago
I don't know for sure. All I know is that the AMF (Autorité des Marchés Financiers, Quebec "equivalent" of the SEC) froze Dominic Lacroix assets on Jun 13 2017[0]. Yet, his employees were still getting paid and he launched Plexcoin even if a court order was forbidding him to do so. Maybe the AMF had information about accounts in USA and tipped the SEC? [0] https://lautorite.qc.ca/en/general-public/media-centre/news/fiche-dactualites/dominic-lacroix-regis-roberge-dl-innov-inc-micro-prets-inc-et-gap-transit-inc-sont-vises-par-pl/ https://lautorite.qc.ca/en/general-public/media-centre/news/... EDIT: More information: The court order preventing him to launch Plexcoin was issued on July 20[1]. He did not comply and was charged for court contempt in September. The court found him guilty on oct 17 2017[2]. [1] https://lautorite.qc.ca/en/general-public/media-centre/news/fiche-dactualites/monnaie-virtuelle-plexcorps-plexcoin-dl-innov-inc-gestio-inc-et-dominic-lacroix-sont-vises-pa/ https://lautorite.qc.ca/en/general-public/media-centre/news/... [2] French only - https://lautorite.qc.ca/grand-public/salle-de-presse/actualite/fiche-dactualite/dossier-plexcoin-dominic-lacroix-et-dl-innov-inc-coupables-doutrage-au-tribunal/ https://lautorite.qc.ca/grand-public/salle-de-presse/actuali...
Erlich_Bachman 9y ago
Because they are US ;). How were they able to bring down btc-e, owned by foreign citizens, employing foreign citizens, registered in a foreign country? US are playing by their own rules, and so far they have made the world to just eat it.

JavaTheScript 9y ago

"Its mission is to broaden the possibilities of uses and to increase the number of users by simplifying the process of managing cryptocurrency to the maximum." ...clear as mud, where do I sign?

nikolay 9y ago

All ICOs should be banned! When you see all these scams around, you start appreciating regulation, law, and order more! I am not sure why so many engineers today are into anarchy when it's entirely against the basis of computer science and engineering in general! I get the idea about the distributed systems for higher resilience, but going against the merits of states and governments is just childish!

juicyfroot 9y ago
Ethereum was an ICO and so was Bitcoin. Ban those too?
jsloss 9y ago
Ah yes, how dare we poke and prod at the validity of current governmental systems and regulations. That feudal era was such great times, if we had only not gone against the merits of the government of the day./s There is little doubt that many ICO's are 'scams', and some people will get hurt financially because of it. The challenge with regulations is, it's easy to quantify the harm they try to stop, but it's harder understand the impact they have on limiting future creation / innovation etc. Tokens / ICO's have created a whole new, far more accessible way to fund and invest in new technology. Making it far more equal, fast, open and liquid than the traditional process. Regulation is coming, as it should. I just hope it's done with an eye for encouraging the right type action, rather than just trying to stop the wrong.
- nikolay 9y ago
  There's no perfect system, but what we have right now is better than anything from the past, and it's only getting better. Anyway, I think under-regulation is worse than over-regulation.
  - stale2002 9y ago
    And it will get better BECAUSE people are trying crazy new things, like ICOs. Sure, there are problems, as with all new things. But the problems will be fixed eventually, and the legal system with be better because of it. People doing something weird, and different and new and probably illegal, is THE way that our legal system gets better, as we learn to deal with new things, that might be bad OR good. And decide whether these illegal things should stay illegal, or become legal.

modeless 9y ago

People might not be so eager to dump money into these scam investments if the government hadn't strangled legal and regulated equity crowdfunding. The SEC needs to look at ways to allow people to invest in legitimate opportunities, not just shut down scams. The JOBS act has been a bust in this regard as far as I can see.

notfromhere 9y ago
That's just trading one problem for another. We'd just see a big increase in equity crowdfunding scams instead
cwperkins 9y ago
There's pretty sound reasons why non-accredited investors can only invest in public tradable assets. Accredited investors can get into non-public companies if they earn a high enough income such that they can take that kind of volatility. For students fresh out of college that should focus on saving, it is not a great idea to throw those savings into non-public startups. It sure sounds tempting, but many times over has been shown to be the most risky asset class.
- ficklepickle 9y ago
  It could be argued that a student has lots of earning potential left in their life, so their risk tolerance is actually higher than someone, say, near retirement on a fixed income. I get what you are saying though. For most people it is not an appropriate investment, hence the accredited investor rules.
- cableshaft 9y ago
  People should be allowed to make risky investments if they want, especially if they keep that risk to a small percentage of their portfolio. Besides, the lotto and casinos exist and are still allowed in most places, which is basically what you're leaving these people to do (and what I've seen many younger people waste their money instead). Isn't it this very website where people over and over again say that the best time to take a risk is when you're young, anyway, and don't have any responsibilities? There's a difference between risky investments and outright scams, though, and I'm fine if the government steps in and stops the scams, although I worry that they'll start seeing every single ICO as a scam and want to stop all of them (to be fair, it almost seems like they all are right now to me as well). That's one of the nice things about the rise of cryptocurrencies, actually, is it's allowed younger people to make bets that have wildly paid off for them, that would otherwise not been available to them. It was risky as hell for sure, but for those people that only put in what they could afford to lose, it's outperformed every other investment by many many times this past year.

Animats 9y ago

This is a typical SEC action against a get-rich-quick Ponzi-type scheme. Read the SEC's note on Ponzi schemes.[1] The original Charles Ponzi only promised a 50% return in 90 days. Bernie Madoff promised about 10-15% a year. This "ICO" promised 1300% in 30 days. [1] https://www.sec.gov/fast-answers/answersponzihtm.html https://www.sec.gov/fast-answers/answersponzihtm.html

brudgers 9y ago
If you can get in early and you recognize it for what it is, a Ponzi scheme can be just another rational investment. Madoff's clients made good returns for a long time. From the perspective of each long term individual investor, the problem was that they did not fold and walk away from the table with their winnings after a few years. The scheme would have survived a few of those, and maybe some investors did. None of which is to imply that I think Ponzi schemes should be legal. I'm not a libertarian.
- deleted 9y ago
  [deleted]
- Animats 9y ago
  Only if they actually pay out withdrawals.
  - brudgers 9y ago
    True any time you hand over a pile of money with the expectation that the recipient will give you more back.

NelsonMinar 9y ago

It's worth noting the SEC describes the perpetrator as "a recidivist Quebec securities law violator". Apparently this isn't the first scam he's run.

joering2 9y ago
Did not know SEC has jurisdiction over Canada, thanks.
- Kalium 9y ago
  They're not claiming it. They're noting that the person in question has a history of securities law violations.

crooked-v 9y ago

"PlexCoin" also seems like a name likely to run into trademark issues with the makers of the media management/DVR software Plex (plex.tv).

stale2002 9y ago
That's not really how trademark works. It is only similar/same industries where that applies. The rule of thumb is consumer confusion. Is an average person going to mix up the 2? In this case, the answer is likely No.
- pessimizer 9y ago
  > Is an average person going to mix up the 2? Isn't the standard "a moron in a hurry"?
- awad 9y ago
  Given the state of the market these days before clicking in to the article I actually assumed the Plex Media folks were getting in on ICO madness
Negitivefrags 9y ago
I would think EVE Online would have a much stronger case. They already have a digital currency called PLEX.

joering2 9y ago

Okay so I will play the Devils advocate here. They have good intentions and basically shrug off bad publicity and continue with their project. Then SEC step in shutting them down and bankrupting them before even charges were filled or they had their chance to defend themselves. Now moving forward months/years later they lack of funds or bad publicity made it they are forced to go down. So yeah in such scenario public and SEC will always be correct it was a scam :) every single time - just cut off founders hands, throw a fine, maybe jail time. Im sure its hard to meet potential business partners, make presentations or sales, when you behind bars.

philipwhiuk 9y ago
The guy's already facing contempt of court charges in Canada. This is more preventing people running with the money.

spondyl 9y ago

I'd be fascinated to see a documentary that followed the launch of an ICO just to see what sort of headspace they're in.

shepardrtc 9y ago
Scam artists have been around since we developed intelligence. These ones are just a little more high-tech.

Frogolocalypse 9y ago

This is going to happen a lot methinks.

hamstercat 9y ago

The AMF had already found him guilty of the same and barred him from soliciting, directly or indirectly, investors for PlexCoin [0]. It's not the first time he gets in trouble, he had a lending "company" that was investigated and was barred from participating anymore [1]. All links in French sorry. [0]: https://lautorite.qc.ca/grand-public/salle-de-presse/actualite/fiche-dactualite/dossier-plexcoin-dominic-lacroix-et-dl-innov-inc-coupables-doutrage-au-tribunal/ https://lautorite.qc.ca/grand-public/salle-de-presse/actuali... [1]: https://lautorite.qc.ca/grand-public/salle-de-presse/actualite/fiche-dactualite/dominic-lacroix-regis-roberge-dl-innov-inc-micro-prets-inc-et-gap-transit-inc-sont-vises-par-pl/ https://lautorite.qc.ca/grand-public/salle-de-presse/actuali...

ShroudedNight 9y ago
This appears to be an English version of [1]: https://lautorite.qc.ca/en/general-public/media-centre/news/fiche-dactualites/orders-issued-against-dominic-lacroix-regis-roberge-dl-innov-inc-micro-prets-inc-and-gap-transi/ https://lautorite.qc.ca/en/general-public/media-centre/news/...

hectorr1 9y ago

For those interested in a little light reading on the subject of Securities Law and Crypto Assets: https://coincenter.org/entry/framework-for-securities-regulation-of-cryptocurrencies https://coincenter.org/entry/framework-for-securities-regula... https://coincenter.org/entry/a-securities-law-framework-for-blockchain-tokens https://coincenter.org/entry/a-securities-law-framework-for-...

gregdoesit 9y ago

Plexcoin, summarized: >"Security is very important to us. That's why we invented a new type of encryption system based on your private virtual currency address, so it is unencyptable." Come up with a new encryption system and tell the world it's unencryptable... I'll just leave this one hanging. Source: Plexcoin blog (https://www.plexcoin.com/blog/important-statement https://www.plexcoin.com/blog/important-statement)

gitgud 9y ago
Well, it says "undecryptable" now... ".... based on your private virtual currency address, so it is undecryptable." But that makes me think it cannot be decrypted, which is pretty bad for an encryption system. If you cannot decrypt the data, it might as well be random noise ...
- yebyen 9y ago
  Even if this statement is pristine, it's still pretty flagrant: > August 10, 13h00 GMT > We implement a unique encryption system that uses a portion of your private PlexCoin address to encrypt your email address, your password and your wallet. Security is very important to us. That's why we invented a new type of encryption system based on your private virtual currency address, so it is undecryptable. I mean, even in context, what does this mean? "Security is very important to us."

toomanybeersies 9y ago

We had a similar thing happen a week or so ago in New Zealand, with the Financial Markets Authority warning against an ICO: http://www.nzherald.co.nz/business/news/article.cfm?c_id=3&objectid=11947186 http://www.nzherald.co.nz/business/news/article.cfm?c_id=3&o... The ICO was later withdrawn: http://www.nzherald.co.nz/business/news/article.cfm?c_id=3&objectid=11948672 http://www.nzherald.co.nz/business/news/article.cfm?c_id=3&o... Basic rundown: 19 year old "serial entrepreneur" buys a Carosell [0] (similar to craigslist) clone script for a couple of grand (apparently he claimed to have made it himself), claims to have millions of users after a couple of months, and then tries to launch an ICO. It was a blatant scam, he was called out for it, and ended up cancelling the ICO, and promising to return all the money. [0] https://en.wikipedia.org/wiki/Carousell_(company) https://en.wikipedia.org/wiki/Carousell_(company)

jeffdo 9y ago

Website redirects me to this url: https://cdn01.plexcoin.com/403.html https://cdn01.plexcoin.com/403.html Sketchy to say the least.

willsr 9y ago

From their FAQ: "Is it safe? The cryptocurrency is currently the safest currency. Unlike cash, you cannot lose it or have it robbed. No bank will be able to validate your transactions or to take fees on your transactions. It's your money and no one will be able to scrutinize your operations." People bought this?

wallacoloo 9y ago

So what actions did the SEC actually take? It's an Ethereum token, right? So even if the SEC froze the creator's assets, they can't prevent others from still trading the token. They haven't completely closed the on-ramps for the token, then, since new "investors" can still purchase them in exchange for some other token. I guess they've just halted the creation of new tokens and the advertisement of the token by its creator? So what happens to all the existing investors? Does the SEC (or another entity) buy back their tokens with the seized funds? Clearly, I haven't dealt with ICOs before, nor do I understand much of how the SEC operates.