SEC Charges Unicoin Over $100 Million Crypto Fraud Scheme

On May 20, the SEC filed a lawsuit against Unicoin and its top executives, alleging that they raised $100 million through deceptive claims about investment certificates backed by overstated real estate assets. Meanwhile, Bancor launched a separate lawsuit against Uniswap, accusing the DeFi giant of patent infringement for using its constant product AMM technology without permission. This was a system Bancor claims it pioneered in 2016. Adding to the turmoil, bankrupt crypto lender Genesis sued parent company DCG and CEO Barry Silbert for allegedly siphoning more than $1 billion through fraudulent loans and misleading transactions. The Genesis lawsuit seeks to recover more than $3.3 billion. Unicoin Hit With SEC Lawsuit The US Securities and Exchange Commission (SEC) filed a lawsuit against cryptocurrency platform Unicoin and three of its top executives, accusing them of misleading investors and raising $100 million through deceptive and unsubstantiated claims. The charges were announced on May 20 and filed in Manhattan federal court. Press release (Source: SEC ) The lawsuit names Unicoin CEO Alex Konanykhin, board member Silvina Moschini, and former investment chief Alex Dominguez as defendants. According to the SEC, the three made false and misleading statements about so-called “rights certificates” that investors purchased, believing they granted access to future Unicoin tokens and equity in the company. Unicoin executives The SEC alleges that these certificates were aggressively marketed as being backed by real-world assets, including a diversified international portfolio of valuable real estate. However, the regulator pointed out that the real estate assets were worth only a fraction of what was advertised, and most of the investment claims made to the public were either inflated or entirely fictitious. Associate Director of Enforcement Mark Cave stated that the executives exploited thousands of investors by promoting false opportunities that had little to no foundation in reality. The complaint seeks permanent injunctions against Unicoin and the people involved, along with disgorgement of what the SEC described as “ill-gotten gains.” This case is now part of the regulator’s scrutiny of crypto-related fundraising practices that skirt securities laws. Bancor Sues Uniswap for Patent Infringement Other crypto projects are also facing legal trouble. Bancor, a pioneer in decentralized finance and creator of one of the earliest automated market maker (AMM) protocols, filed a lawsuit against Uniswap, alleging patent infringement related to the core technology that powers modern decentralized exchanges. The lawsuit was announced on May 20 and was filed in the US District Court for the Southern District of New York. It accuses Uniswap Labs and the Uniswap Foundation of using Bancor’s patented invention without authorization and profiting from it. Bancor press release According to Bancor, the disputed technology revolves around the concept of a “constant product automated market maker”—which is a mathematical model that governs how assets are added to or withdrawn from liquidity pools. Bancor claims to have developed this method in 2016 and secured patents for it in early 2017. This innovation later became a foundational component of many DeFi platforms, and enabled token swaps without relying on traditional order books. Bancor alleges that Uniswap, which launched its protocol in November of 2018, utilized this same invention without permission and since became one of the most dominant players in the DeFi space as a result. Mark Richardson, project lead at Bancor, stated that the decision to take legal action stems from Uniswap’s continued use of Bancor’s technology without a license, and that such unchecked behavior could undermine future innovation in the sector. Top DEXs by 24 hour volume (Source: DefiLlama ) Despite being the originator of the AMM concept, Bancor has not matched Uniswap’s success in terms of trading activity. According to data from DeFi analytics platform DefiLlama , Uniswap ranks second among all decentralized exchanges with close to $3.7 billion in 24-hour trading volume on May 20. Bancor, by contrast, was ranked 142nd, with a comparatively modest daily volume of $378,579. Uniswap has processed an impressive $2.8 trillion in total trading volume since its inception. The lawsuit seeks monetary damages for what Bancor describes as the unlicensed use of its patented system and wants to hold the Uniswap Foundation accountable for encouraging the continued infringement. Genesis Sues DCG and Barry Silbert for Fraud To add to the legal onslaughts in the crypto industry, Genesis filed two lawsuits against its parent company, Digital Currency Group (DCG), and its CEO, Barry Silbert, accusing them of orchestrating a massive scheme involving fraud, reckless mismanagement, and the siphoning of more than $1 billion in value from the now-bankrupt firm. The allegations were brought forth by Genesis through its Litigation Oversight Committee (LOC), and claim that DCG and its affiliates drained funds via self-serving loans, concealed transactions, and manipulative accounting practices, ultimately misleading creditors and pushing Genesis further toward insolvency. A key component of the lawsuit was unsealed on May 19 in Delaware’s Court of Chancery. It describes how DCG allegedly treated Genesis like a corporate ATM by extracting over a million digital coins—valued at $2.1 billion—while providing a false impression of Genesis’s financial strength. The complaint also shared more details about how Silbert and other insiders, including former Genesis CEO Michael Moro, former DCG CFO Michael Kraines, DCG President Mark Murphy, and investment banking partner Ducera Partners, conducted sham transactions at the end of multiple financial quarters in 2022. These moves were allegedly designed to mislead Genesis lenders into believing DCG was injecting liquidity into the lender, while in reality, the support was largely an illusion. Among the most damaging claims is that Genesis was forced to accept illiquid shares of the Grayscale Bitcoin Trust (GBTC) as collateral—shares that were not only locked for six months due to SEC restrictions but were also explicitly prohibited from resale by DCG even after the lockup period ended. Genesis creditors are still owed an estimated $2.2 billion in crypto assets, including over 19,000 Bitcoin and almost 70,000 Ethereum. In a second lawsuit that was filed in US Bankruptcy Court, Genesis accused DCG and affiliates of withdrawing more than $1.2 billion in digital and fiat assets during the year leading up to Genesis’s bankruptcy filing. These withdrawals allegedly took place during periods of extreme market stress, including the collapses of Terra-Luna, Three Arrows Capital, and FTX, at a time when Genesis was already insolvent . According to internal documents, insiders managed to recover nearly all their funds, while retail and institutional investors were left to shoulder the losses. DCG dismissed the lawsuits as baseless and opportunistic, and claims that the complaints recycle outdated accusations and ignore efforts that were made to resolve matters through negotiations. Nevertheless, Genesis is now seeking to recover over $3.3 billion through these legal actions.