SEC charges Crowd Machine over allegedly unregistered ICO

advertisement

The Securities and Exchange Commission has charged an Australian man for allegedly making false claims related to an unregistered initial coin offering (ICO).

The US securities regulator charged Craig Sproule and his two companies, Crowd Machine and Metavine, over an ICO of the firms' Crowd Machine Compute Tokens (CMCTs). The offering occurred from January to April of 2018. 

The SEC claims Sproule publicized that the ICO proceeds would go to new technology development for Metavine, enabling the firm to run its app-development software on a decentralized network. Instead, the SEC claims Sproule and Crowd Machine diverted the $5.8 million to gold mining entities in South Africa without alerting investors.

Furthermore, the SEC claims that the CMCT sale constituted an unregistered securities offering, and that Sproule and his firms knowingly sold the tokens without determining if the investors were accredited. 

The SEC filed its complaint in the United States District Court for the Northern District of California, charging Sproule and Crowd Machine with violating antifraud and registration provisions in federal securities laws. Metavine is acting as a relief defendant, meaning the firm is considered an innocent party despite being named in the case, but holds funds on behalf of the accused party, in this case CrowdFund. 

The defendants have neither admitted or denied the allegations, but they have consented to judgments that would bar them from future violations or participation in future securities offerings and would require them to permanently disable and seek delisting of the CMCT tokens. Sproule also cannot serve as an officer or director of a public company and must pay a fine of $195,047.

Any disgorgement or civil penalties will be determined by the court in the future. 

Trending Stories

Get Your Crypto
Daily Brief

Delivered daily, straight to your inbox.

Will Sanctions Drive Russia into the Arms of Cryptocurrencies?

From the removal of many Russian banks from SWIFT to a seemingly constant flow of new sanctions, Russia’s invasion of Ukraine has left many to wonder: Is the country likely to lurch towards cryptocurrencies? And if so, what does this mean for businesses that are holding and/or using crypto? Crypto and sanctions evasion Although crypto […]
Read Full Story
Sponsored Post

Layer-2 Scaling Solutions: A Framework for Comparison - Commissioned by Polygon

Ethereum had a breakout year in 2021. It’s native asset, ETH’s, market capitalization surpassed $500 billion for the first time. Its network facilitated upwards of $7 trillion value transfer. Non-fungible tokens (NFTs) emerged as another “killer application” that have put its technology on the global stage and caught the attention of the masses.
Read Full Story
May 5, 2022, 3:17PM UTC
More