Lawyers at Morrison Cohen have stepped in to defend the alleged fraudsters behind the “PlexCoin” initial coin offering (ICO), and argue in a letter to a Brooklyn federal judge that the U.S. Securities and Exchange Commission has vastly overstepped its authority.

The PlexCoin ICO was the first enforcement target of the SEC's new “Cyber Unit,” established in September. Earlier this month, the judge presiding over the case granted a preliminary injunction freezing the assets of Dominic Lacroix and Sabrina Paradis-Royer, the people behind PlexCorps, who reside in Canada. Lacroix was characterized by the SEC as a repeat fraudster.

In a letter filed Thursday to U.S. District Judge Carol Amon of the Eastern District of New York, Morrison Cohen partner Jason Gottlieb previewed the defendants' forthcoming motion to dismiss. Gottlieb argued the case should be tossed out because the “SEC has engaged in a tremendous overreach, toward persons who are not subject to personal jurisdiction in this judicial district, and toward transactions that are excluded from regulation under U.S. federal securities laws.”

The letter goes on to say that in conducting the PlexCoin ICO, the defendants required purchasers of the cryptocurrency to confirm that they were not U.S. citizens. “Even assuming for this motion that the transactions at issue in the complaint were transactions in securities—which will be a major area of dispute … —the SEC pleads no facts that suggest the transactions were domestic transactions as required under the Supreme Court's landmark Morrison decision.” He was referring to Morrison v. National Australia Bank Ltd., decided in 2010.

Ryan White, a spokesman for the SEC, declined to comment on Friday.

The complaint by the SEC alleges that the tokens the Lacroix offered investors were, in fact, unregistered securities and that numerous claims about their potential value were based on false statements. It says that he and Paradis-Royer have obtained some $15 million from thousands of investors since launching the ICO in August.

The coin offering claimed to offer investors “tokenized currency” that would appreciate in value, with early investors reaping “outlandish rewards of 1,354 percent in 29 days or less,” the SEC's complaint says. The SEC also alleges that Lacroix sought to hide his involvement in the project because he was “a known securities law violator in Canada.”