In 2017, hundreds of ICOs gathered more than $4 billion's worth of funds, and while there were some jitters from hawkish regulators, there were very few crackdowns on any one project.
But the Canadian authorities have become extremely vigilant, and along with the US Securities and Exchange Commission tore down the Plex Coin ICO for fraudulently selling an inflated investment opportunity.
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The Origins of Plex Coin ICO
The noise around Plex Coin started in the summer- and continued, with the main pitch not the technology, but the potential returns, and the ease of buying. This explains how the project amassed more than $15 million's worth of assets and cash.
We hope you are ready!
PlexCoin ICO will be bigger than Ripple, Status, Stratis, TenX, Monaco, etc. All the PlexCoin will be sold quickly! pic.twitter.com/MHt33K6GGQ
— PlexCoin (@PlexCoinINFO) September 10, 2017
It was obvious that their main concern was to sell more coins. The project started in August, and the most frequent tweet from their team was about sending in money, pushing users to register and invest more.
The white paper, now defunct, is dated August 2017.
How Plex Coin Scammed Investors
Plex Coin can be compared to other ICOs– except for its even more aggressive, months-long campaigning that gathered $15 million in funds, while promising 13-fold returns. Granted, ICO tokens have sometimes appreciated greatly in price, but that has been organic growth. Plex Coin instead promised a lot, while giving very vague information in its white paper.
Curiously, Plex Coin actually exists. It is an Ethereum-based token, a very generic digital asset. The coin is even traded on Cryptopia, an all-purpose crypto marketplace. But its price has crashed, from a post-ICO peak of $0.50, to just $0.02, with volumes of around $6,000 per day.
In the white paper, the project promised in convoluted language that the coin price may be manipulated by buybacks.
When the investigation ended, the project's founder Dominic Lacroix received a jail sentence and a fine. A two-month sentence was combined with a $10,000 CAD fine. It was the fine that is the curious thing: issued for contempt of court, because Lacroix went on with the ICO and token distribution despite being ordered to stop the fundraising. Lacroix's company, DL INOV, will have to pay a heftier fine of $100,000 CAD.
The Plex ICO ended at the beginning of October, and the project was not shy about the funds it raked in.
— PlexCoin (@PlexCoinINFO) October 1, 2017
The sums gathered make Plex look like a quite successful ICO, compared to more technically involved projects with a promise that somehow fail to attract investment.
The Public Profile of Plex ICO
It's uncertain how Plex Coins managed to reach more than 20,000 wallets, given that some of the most promoted ICOs gather around 10,000 backers. The Plex Coin Twitter account has only 435 followers, and the Facebook profile is rarely visited. Plex Coin has a very small social media footprint- and yet it managed to reach enough potential buyers, in a manner similar to hawking pink sheet stocks.
The comments on Facebook fall into three categories: staunch believers who still have hopes for Plex Coin, disappointed buyers who want a refund and others who have lost coins for technical reasons. Currently, the project is in a bad shape, with no technical updates. Somehow though, a small community has gathered around the coin, potentially expecting an update from the Plex Coin team- and maybe giving a bit of false hope. Currently, Lacroix and his company have had their assets frozen, and this may affect the potential for the project to continue.
Plex conducted its ICO through PayPal and Shopify, offering an unprecedented ease of access, thus being able to contact people who had never heard of cryptocurrencies. With a proposal like that, owners of Ethereum would have been much more skeptical, but Lacroix made people pay the old-fashioned way, by promising thousand-fold returns within days to backers who may have lacked understanding of cryptocurrencies.
The Plex project is largely mocked by the crypto community, and presented as a cautionary tale.
The PLEX Token
As we said before, the PLEX token continues to live. And the company's social media accounts are still touting its benefits, causing the occasional pump that may invite newbie investors who want amazing returns from a single token. More than 22,000 Ether addresses contain PLEX tokens, as users are still attempting to send them to exchange wallets.
Of course, the funds gathered in the ICO may still be sitting on the Ethereum he received.
Initially, the Plex Coin just stood as a number on the Plex project website- and only later the company added a “withdraw” button. In the case of crypto tokens, this should not be necessary- they can be sent immediately to MyEtherWallet. What is curious is that Plex Coin may have only existed as a fake asset, before the actual token was created.
The Plex project claimed it had a proprietary wallet, and no-fee transactions- but it may turn out the actual ERC-20 token was non-existent then, and the so-called wallet was merely a number on a web page, explaining how it is possible to send without a transaction fee. Sending and ERC-20 token without a gas fee in Ethereum is impossible.
Needless to say, the token never showed up on any of the big exchanges, as the Twitter account promised:
One of plexcoin's revolutionary options is that you will be able 2 buy your coin from exchanges like Coinbase, Poloniex, Kraken FX, Jaxx.io pic.twitter.com/BpwEH8lQiW
— PlexCoin (@PlexCoinINFO) September 10, 2017
Plex Coin ICO is just one of many. Scams of this type include the Confido debacle, where the team disappeared outright. There are other ICOs that show little readiness to deliver a product, and their tokens languish in obscurity, with the clear intention of being a one-off pump-and-dump scheme, which wipes out a lot of value for investors.
Other ICOs have gathered up funds and floundered- but Plex is almost one of a kind, in its relentless push to gather more and more backers.
Further Dangers of Plex Coin
Despite the arrest of Lacroix and the fines, the Plex Coin continues to exist and trade- and perhaps excite new buyers to try it out for a quick return. But possibly, PLEX is already a dead coin, and despite a hope it may regain legitimacy, it is a digital asset best left untouched, as one would pass over Useless Ethereum Token (UET), also a tradable ERC-20 asset.
The silver lining is, the recent asset freeze stopped around $810,000 worth of funds from being processed by Stripe, one of the payment alternatives chosen by Lacroix. The Bitcoin and Ethereum sent cannot be recovered for now, but there is a possibility that they will be returned in the future.