US SEC Charges Australian Man for $41M ICO Fraud

The US Securities and Exchange Commission (SEC Securities and Exchange Commission (SEC) The Securities and Exchange Commission (SEC) is one of the most widely known independent authorities in the United States. The SEC has a wide range of responsibilities, helping police markets and curbing against abuse. This includes enforcing federal securities laws, proposing securities rules, and regulating the US’ stock and options exchanges.As one of the paramount regulatory authorities in the US, the SEC is responsible for the oversight of public companies in the aforementioned segments.Wha The Securities and Exchange Commission (SEC) is one of the most widely known independent authorities in the United States. The SEC has a wide range of responsibilities, helping police markets and curbing against abuse. This includes enforcing federal securities laws, proposing securities rules, and regulating the US’ stock and options exchanges.As one of the paramount regulatory authorities in the US, the SEC is responsible for the oversight of public companies in the aforementioned segments.Wha Read this Term) has charged and settled with Craig Sproule and his two companies, Crowd Machine and Metavine, for fraudulently raising $40.7 million via an initial coin offering (ICO Initial Coin Offering (ICO) An Initial Coin Offering (ICO) is a kind of crypto token sale that is used as a method of fundraising, similar to an Initial Public Offering (IPO), in which stocks are sold to raise money for a company.In order to launch an ICO, a company simply needs to create a website, issue a token, and set a time and date for the sale. Investors buy ICO tokens in exchange for another cryptocurrency, like Bitcoin or Ethereum; after a set amount of time, they receive the tokens they purchased in the sale.Acco An Initial Coin Offering (ICO) is a kind of crypto token sale that is used as a method of fundraising, similar to an Initial Public Offering (IPO), in which stocks are sold to raise money for a company.In order to launch an ICO, a company simply needs to create a website, issue a token, and set a time and date for the sale. Investors buy ICO tokens in exchange for another cryptocurrency, like Bitcoin or Ethereum; after a set amount of time, they receive the tokens they purchased in the sale.Acco Read this Term).

According to the charges filed at a California court, the Australian citizen made materially false statements about the offer and sale of the unregistered ICO.

The official announcement on Thursday detailed that the ICO proceeds were raised between January and April 2018. The project promised investors that the money will be used to develop a new technology for Metavine that would enable the software to run on a decentralized network of users’ own computers.

However, Sproule diverted more than $5.8 million of the funds and injected them into a gold mining entity in South Africa. All these were done without informing the investors.

Additionally, the agency pointed out that the ICO was unregistered, and the tokens were sold through an ICO pool to even United States-based investors and did not check if they were accredited or not.

Consented

The charges brought against Sproule and Crowd Machine include violation of antifraud and registration provisions of the federal securities laws. All the parties have already consented to the judgments of permanent enjoin from violation of any provisions in future and participating in the securities offering, without admitting or denying any of the charges.

Moreover, they were ordered to disable the sold IPO tokens and remove than from exchanges. Furthermore, Sproule has been ordered to pay a civil penalty of $195,047, while the disgorgement and penalties on Crowd Machine will be determined later.

“As alleged, Sproule and Crowd Machine misled investors about how they were using ICO proceeds, spending funds on an entirely unrelated scheme,” Kristina Littman, the Chief of the SEC Enforcement Division’s Cyber Unit, said in a statement. “We will continue to hold accountable issuers of digital asset securities who fail to provide fulsome and truthful disclosure to the public.”