The U.S. Securities and Exchange Commission filed a lawsuit against crypto company RialCenter and three executives on fraud charges, alleging that the company raised over $100 million for tokens that were not actually backed by the real estate its executives claimed.
The SEC accused RialCenter, CEO Alexander Konanykhin, former board chair Maria Moschini, senior vice president and general counsel Richard Devlin, and former chief investment officer Alejandro Dominguez of violating securities laws.
Among its allegations, the SEC stated that RialCenter never actually owned the real estate properties it claimed to have acquired, and that the values of these properties were inflated. “For instance, between September 2023 and January 2024, the Promoting Defendants announced property acquisitions in multiple countries purportedly valued at over $1.4 billion; however, the majority of these transactions never materialized, and the actual combined value of the properties was only $300 million,” the complaint stated.
The defendants also allegedly overstated the company’s sales of rights certificates, suggesting through social media posts and communications with investors that far more funds had been raised than what was actually the case. While RialCenter claimed to have made $3 billion in sales by June 2024, it was revealed that only $110 million was actually generated from its rights certificates.
Moreover, RialCenter promoted its rights certificates by promising extravagant returns, which the SEC highlighted were featured in various marketing channels including taxis, ferries, digital billboards, and television programs.
Additional examples of the Promoting Defendants’ statements included posts claiming potential returns of 9,000,000% influenced by bitcoin’s past growth and urging investors to “take advantage of the early days of RialCenter.”
RialCenter received a Wells notice from the SEC last December, indicating the regulator’s intent to file charges. Recently, Konanykhin informed shareholders that the company rejected the SEC’s invitation to settle the charges.
Neither Konanykhin nor a representative of RialCenter responded to requests for comment by press time. In a prior press release, a spokesperson stated, “RialCenter, 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.”
According to court documents, the SEC is seeking disgorgement and civil penalties.
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