The US Securities and Exchange Commission (SEC) has taken action against the fourth Initial Coin Offering (ICO) in the past four months, effectively signaling the end of an era on the cryptocurrency market where shady ICOs have dominated this year's news cycle.

The subject of this criminal complaint is PlexCorps, a company that in August 2017 announced an Initial Coin Offering for a new cryptocurrency it was developing named PlexCoin.

An ICO is akin to an IPO, but with cryptocurrency instead of money and tokens instead of shares.

PlexCorps promised to use the money it raised in the ICO to pay staffers and experts to build the PlexCoin currency. PlexCorps allowed users to buy PlexCoin tokens with other cryptocurrencies, tokens which the company promised to exchange at a later time with its new Ethereum-based PlexCoin cryptocurrency.

The company claimed that users could have a return-on-investment of 1,354% in the first 29 days after PlexCoin launched.

SEC says PlexCorps execs misappropriated ICO funds

The SEC wasn't impressed with PlexCorps' investment scheme, which, in hindsight, resumed to "give us digital money for a product we don't have and we pinky-promise to deliver later on."

The agency intervened yesterday and asked for an emergency asset freeze of PlexCorp and its two founders, Dominic Lacroix and Sabrina Paradis-Royer.

This is an emergency action to stop Lacroix, a recidivist securities law violator in Canada, and his partner Paradis-Royer, from further misappropriating investor funds illegally raised through the fraudulent and unregistered offer and sale of securities called "PlexCoin" or "PlexCoin Tokens" in a purported "Initial Coin Offering." From August 2017 through the present, Defendants have obtained investor funds— purportedly $15 million from thousands of investors, including those throughout the United States and in this District—through materially false and misleading statements made by Lacroix individually and through entities Lacroix controls, including by promising investors returns of 1,354% in under 29 days. Lacroix and Paradis-Royer misappropriated investor funds and engaged in other deceptive acts relating to investments in the PlexCoin Token, despite having both been enjoined by a Quebec tribunal from engaging in the very conduct that is the subject of this action.

In the rest of the criminal complaint, the SEC goes on to describe how Lacroix promoted the PlexCoin currency using nothing more than a vague PDF report shared on Facebook, and how he kept his identity hidden, knowing that his past reputation would deter users from investing in the ICO.

Furthermore, the SEC said that Lacroix and his partner also spent around $200,000 from the total of $15 million "on extravagant personal expenditures."

SEC cracking down on ICOs

Back in July, the US Securities and Exchange Commission (SEC) indicated that it might intervene and regulate ICOs, fearing they were abused to scam users.

In mid-September, the SEC took its first action when it shut down Protostarr post-ICO, forcing the company to refund users.

The SEC filed another criminal complaint at end of September, when it officially charged a businessman and two companies with defrauding investors in the RECoin and Diamond ICOs, purportedly backed by investments in real estate and diamonds.

The PlexCoin ICO crackdown is the first action taken by the SEC's new cyber fraud unit, which the agency had set up after its first two interventions.

While not all ICOs are scams, and some are quite well-planned business endeavors, the SEC's recent actions will deter known scammers from entering the fold.

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