The Trump Administration has said repeatedly it intends to bolster the economy by leveling the playing field for cryptocurrency companies and the coins they generate. But the Securities and Exchange Commission under former commissioner Gary Gensler conducted a virtual vendetta against cryptocurrencies.

The Gensler-led SEC forced cryptocurrencies to operate under oppressive rules that must not be used against cryptocurrencies today. It was right to place ongoing cases against cryptocurrencies on hold until appropriate regulations and policies for cryptocurrencies are established.

Cases involving only prospective – not actual – harm to investors should be dropped entirely.m Regulatory delays must be brief to that companies can avoid needless financial loss and harm to their investors and their employees.

These losses are real. Gensler’s vendetta may have violated federal law if the SEC bent its rules with the intent to cause harm. Could the government itself have liability if the SEC leadership defrauded investors?

These questions are not theoretical.

They apply to an ongoing case against Unicoin, Inc., and three of its principals. And they apply to Unicoin investors greatly harmed by what Unicoin co-founder and CEO Alex Konanykhin suggests was a pattern of arbitrary and capricious action by Gensler, Enforcement Division associate director Mark Cave, and SEC staffers.

In May 2024, Gensler’s crypto enforcement division issued subpoenas against Konanykhin and other principals concerning Unicoin’s main product -- the Unicoin, a cryptocurrency backed by real-world assets, including real estate holdings.

In announcing the Unicoin in 2022, Konanykhin explained the token would be collateralized by real-world assets, including nearly 8,000 acres in the Bahamas valued at over $500 million, ,as well as another large property in Thailand, to be purchased in tokens at 140% of face value.

But the barrage of SEC investigations forced Unicoin to enter into a standstill agreement not to conduct an Initial Coin Offering (ICO) or go public –actions Konanykhin says have cost his investors billions of dollars. After the 2024 election, however, Unicoin moved toward going public via a reverse merger.

The election of a pro-crypto administration also saw at least 240 pro-crypto candidates win seats in Congress. President-Elect Trump nominated DeFi supporter Scott Bessent as Treasury Secretary, Paul Atkins as SEC Commissioner, and former PayPal COO David Sacks as White House AI and Crypto Czar – charging him to create a legal framework for the crypto industry.

In Sacks’ words, “the reign of terror against crypto is over, and the beginning of innovation in America for crypto has just begun.” And so, for companies like Binance, Coinbase, Kraken, Opensea, and Uniswap, it had.

Gensler was doubtless livid. In December 2024, the SEC issued a Wells Notice informing Unicoin and its principals of its intent to file a lawsuit claiming fraud, deceptive practices, and the offering and sale of unregistered securities. 

Even before Atkins was confirmed by Congress, the SEC had paused or dismissed multiple lawsuits and investigations involving those and other major cryptocurrency firms, marking a significant turnaround in regulatory enforcement. As far as it went, the SEC was honoring the principle of starting all over when the old rules were declared invalid or counterproductive.

And yet – in May, Gensler acolyte Cave announced the SEC had charged Unicoin, Inc., Konanykhin, former board chair Silvina Moschini, former CIO Alex Dominguez, and General Counsel Richard Devlin with false and misleading statements in offering certificates that “purportedly” conveyed rights to receive crypto assets and in offering Unicoin’s common stock.

As Cave saw it, Unicoin and its executives “exploited thousands of investors with fictitious promises that its tokens, when issued, would be backed by real-world assets including an international portfolio of valuable real estate holdings. But we allege,” said Cave, “the real estate assets were worth a mere fraction of what the company claimed, and the majority of the company’s sales of rights certificates were illusory.”

Konanykhin says it is the SEC’s official position that is fictional and that this lawsuit is retribution for his decision to go public and end the punishment of Unicoin’s investors imposed by the SEC in forbidding the ICO. “How did we get so important to become the final focus of the SEC?,” he said.

Konanykhin seems an odd target for a regulatory vendetta – let alone one continued by an administration supposedly friendly to legitimate cryptocurrency firms. Unicoin, the only publicly reporting and audited cryptocurrency firm in the U.S., has spent millions on compliance and provided near-daily updates on its objectives, challenges, strategies, and achievements.

The firm, whose board has included a former SEC commissioner, a former U.S. Treasurer, a former White House CFO, and others with spotless reputations, had passed two prior, exhaustive SEC investigations with “flying colors.” The SEC had found no inaccuracies in Unicoin’s audited reporting or any misappropriation of funds.

Moreover, Konanykhin had won five previous lawsuits against the federal government and even won compensation from the Justice Department for prior wrongdoings toward his companies. 

So why did the SEC continue its legal action that has cost four thousand Unicoin investors multi-billion-dollar damages?

Konanykhin believes that, even with Gensler gone, the anti-crypto regulators he had elevated to positions of authority continued his campaign to destroy a compliant cryptocurrency company poised to become the nation’s first to be publicly traded.

These clearly fabricated charges, he says, constitute a gross abuse of regulatory power that continues Gensler’s unconstitutional war on crypto and seeks to sabotage President Trump’s efforts to make America the world’s crypto capital.

Unicoin has filed a Motion to Dismiss this “punitive, frivolous, and misguided” lawsuit with the U.S. Court for the Southern District of New York. Meanwhile, no one from the Trump crypto team has intervened on Unicoin’s behalf – perhaps to avoid any claim of political interference.

The Court ought to act quickly to end this selective campaign against Unicoin – or the Trump Administration should explain why it is giving the appearance of approving the action to crush an American-based crypto company and cost its investors dearly. Until then, the “reign of terror” against Unicoin continues.

Duggan Flanakin is a senior policy analyst at the Committee For A Constructive Tomorrow who writes on a wide variety of public policy issues.

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