{"url_path":"/sec/cik-0001740742/10-q/2026/item-1","section_key":"item-1","section_title":"Item 1 Legal Proceedings.**","topic":"sec","document":{"doc_type":"10-Q","doc_date":"2026-05-15","source_url":"https://www.sec.gov/Archives/edgar/data/1740742/0001829126-26-005346-index.html","accession_number":"0001829126-26-005346","cik":"0001740742","ticker":null,"issuer_name":"TransparentBusiness, Inc.","edgar_url":"https://www.sec.gov/Archives/edgar/data/1740742/0001829126-26-005346-index.html","primary_entity_key":"0001740742","primary_entity_name":"TransparentBusiness, Inc."},"word_count":629,"has_tables":true,"body_markdown":"**Item 1. Legal Proceedings.**\n\n \n\nWe may from time to time be involved in various claims and legal proceedings of a nature we believe are normal and are incidental to our business. These matters may include product liability, intellectual property, employment, personal injury caused by our employees, and other general claims. Regardless of outcome, litigation can have an adverse impact on us because of defense and settlement costs, diversion of management resources and other factors.\n\n \n\nOn December 10, 2024, we received a “Wells Notice” from the staff of the U.S. Securities and Exchange Commission (the “SEC”), indicating that the SEC staff had made a preliminary determination to recommend that the SEC file an enforcement action against us. The proposed action would allege violations of Section 10(b) of the Securities Exchange Act of 1934, as amended (the “Exchange Act”), and Rule 10b-5 thereunder, as well as Sections 5 and 17(a) of the Securities Act of 1933, as amended (the “Securities Act”). The SEC staff further advised that any such enforcement action could involve a civil injunctive proceeding or other action permitted by law and could seek remedies including injunctive relief, disgorgement, pre-judgment interest, civil monetary penalties, and other relief.\n\n \n\nAlso on December 10, 2024, Alex Konanykhin, our Chief Executive Officer and Chairman of our board of directors, Silvina Moschini, one of our directors and the Chief Executive Officer of our subsidiary Unicorns, Inc., Alejandro Dominguez, our Chief Investment Officer, and Richard Devlin, our former Senior Vice President and General Counsel, each received Wells Notices from the SEC staff. These Wells Notices similarly indicated a preliminary determination to recommend enforcement actions against such individuals alleging violations of Section 10(b) of the Exchange Act and Rule 10b-5 thereunder and Sections 5 and 17(a) of the Securities Act. In addition, in the case of Mr. Konanykhin and Ms. Moschini, the SEC staff indicated that the proposed enforcement action could allege violations as controlling persons under Section 20(a) of the Exchange Act. The SEC staff advised these individuals that remedies sought could include injunctive relief, disgorgement, pre-judgment interest, civil monetary penalties, officer and director bars, limitations on activities, and other relief within the SEC’s authority.\n\n \n\nWells Notices are not formal allegations or findings of wrongdoing. Rather, they provide recipients with an opportunity to make a submission to the SEC staff before a final recommendation is made to the SEC or the SEC votes on whether to authorize an enforcement action. We and the named individuals submitted responses to the Wells Notices, as previously disclosed in our Current Report on Form 8-K filed on December 17, 2024.\n\n \n\nOn May 20, 2025, following the Wells Notice process, the SEC filed a civil enforcement action against TransparentBusiness, Inc. and certain individuals, including Alex Konanykhin, Silvina Moschini, Richard Devlin, and Alejandro Dominguez, in the United States District Court for the Southern District of New York. The action is captioned *Securities and Exchange Commission v. Unicoin Inc. f/k/a TransparentBusiness, Inc., et al.*, Case No. 1:25-cv-4245 (S.D.N.Y.). The SEC’s complaint alleges violations of various provisions of the federal securities laws in connection with our offer and sale of digital assets, including unicoin tokens, as well as alleged material misstatements and omissions in communications with investors. The SEC is seeking injunctive relief, disgorgement of proceeds, civil monetary penalties, officer and director bars, and other equitable relief.\n\n \n\nWe believe the claims asserted by the SEC are without merit and intend to vigorously defend against the allegations. Nevertheless, this matter may result in financial liability, restrictions on future capital-raising efforts, reputational harm, and increased costs and diversion of management attention, and could materially affect our business, operations, and prospects.\n\n \n\nRegardless of outcome, litigation can have an adverse impact on us because of defense and settlement costs, diversion of management resources and other factors.\n\n \n\n45"}