SEC to distribute $175,000 to ParagonCoin ICO scam victims

SEC to distribute $175,000 to ParagonCoin ICO scam victims

Investors in ParagonCoin, one of the many cryptocurrency scams that sprung up in the 2017 ICO mania, are set to recoup a small share of the money they lost when it went bust. The U.S. securities regulator has confirmed it will distribute $175,000 to the victims, even though the project had raised more than $12 million in its sham coin offering.

ParagonCoin was founded in 2017 by Jessica VerSteeg and her husband Egor Lavrov. It claimed to offer its PRG token to power payments in the cannabis industry, its ParagonChain blockchain to power the cannabis supply chain, and Paragon Space, the first cannabis co-working space in Los Angeles. The project later put up this space for sale for $4.2 million after its legal troubles. Since it was during the ICO mania season when any project could raise millions, VerSteeg and Lavrov attracted hundreds of investors who put in $12,066,000 in BTC and Ether.

The U.S. Securities and Exchange Commission (SEC) went after the project on charges of selling an unregistered security. Paragon settled with the regulator in what was the first civil penalty imposed by the SEC solely for ICO securities offering registration violation.

While Paragon was to compensate the $14.9 million it owed its investors, the founders declared bankruptcy and fled the U.S. They had only paid part of the $250,000 civil monetary penalty at that time to the SEC.

Now, the regulator has revealed it will distribute some of this money to the victims. In a statement, the SEC revealed that it’s establishing a Fair Fund to distribute the funds.

“The Commission staff has determined that it is feasible to distribute the civil money penalty funds paid to date to compensate investors harmed by Respondent’s conduct described in the Order. Therefore, the Commission staff has taken the appropriate steps to recall from Treasury the $175,000 paid by Respondent.”

The Fair Fund shall be used to distribute any future funds the Paragon founders pay to the SEC.

ParagonCoin is one of the many sham projects that sprung up during the ICO season in 2017 that have now gone bust. However, many digital currency investors are yet to learn from their mistakes. The current Ethereum DeFi mania is proof that many are still on the hunt for get-rich-quick schemes. So far, tens of projects have lost hundreds of millions of dollars, including Pickle Finance, Warp Finance, Nexus Mutual, Compunder Finance, Value DeFi and more.

Follow CoinGeek’s Crypto Crime Cartel series, which delves into the stream of groups—from BitMEX to Binance, Bitcoin.com, Blockstream, ShapeShift, Coinbase, Ripple and
Ethereum—who have co-opted the digital asset revolution and turned the industry into a minefield for naïve (and even experienced) players in the market.

New to Bitcoin? Check out CoinGeek’s Bitcoin for Beginners section, the ultimate resource guide to learn more about Bitcoin—as originally envisioned by Satoshi Nakamoto—and blockchain.

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