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Crowd Machine ICO hit with fraud charges over $41M token sale in 2018

Crowd Machine ICO hit with fraud charges over $41M token sale in 2018
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The US Securities and Exchange Commission has charged an initial coin offering (ICO) issuer fraud for a 2018 ICO that raised nearly $41 million. The agency claimed that Crowd Machine conducted an illegal ICO and then committed revenue fraud.

In the charges filed in Northern California District Court in San Jose, the Securities and Exchange Commission (SEC) charged Craig Derrell Sproul and his company, Metavine Inc. Conducting an illegal ICO between January and April 2018. Sproule raised funds by selling Crowd Machine account tokens or CMCTs.

Sproule allegedly provided investors that funds would be used to fund the development of a decentralized global peer-to-peer network or Crowd computer. This network would run his company’s existing application development program “without code” from a network of private user machines rather than traditional central servers.

Sproule also claimed that once sold, the CMCT tokens will be used as compensation to users who contributed excess processing capacity on the network, according to the regulator. The tokens are also supposed to be used to pay software developers to take advantage of source code that users can quickly compile into custom apps.

Sproule, who referred to himself as “the man behind the machine,” has vowed to continue working, commercializing the company’s technology and increasing the demand for the token, creating additional value for CMCT token holders.

However, as the Securities and Exchange Commission found, Sproule and his company never worked on the projects they promised investors. The regulator said that the CMCTs turned out to be worthless tokens and their ecosystem did not have much to use.

Sproule allegedly turned around $5.8 million of the money it raised in ICOs for South African gold miners in the form of loans or share-equity exchanges, according to the SEC. None of the companies in which he invested returned any profits.

The Securities and Exchange Commission (SEC) has accused Sproule and his companies of violating the registration and anti-fraud provisions of the federal securities laws. The defendants agreed to the verdict without denying or acknowledging the allegations. They have vowed to permanently disable CMCT tokens and seek to remove them from the exchanges.

Sproule will also have to pay $195,047 in civil penalty and must not serve as an officer or director of a public company. He is still awaiting a court ruling on the cancellation and pre-judgment benefit he and his company must pay.

“Sproule and the Crowd Machine allegedly misled investors about how they use the proceeds of the ICO, spending money on a completely unrelated scheme. We will continue to hold issuers of digital assets that fail to be held accountable,” said Kristina Littmann, head of the cyber unit in the SEC’s Enforcement Division. in providing a comprehensive and honest disclosure to the public.

He follows CoinGeek’s Crypto Crime Cartel The series, which delves into the stream of groups — from BitMEX to BinanceAnd Bitcoin.comAnd BlockstreamAnd the shapeAnd Queen PieceAnd rippleAnd
EthereumAnd FTX And pregnancy—who chose the digital asset revolution and turned the industry into a minefield for naive (and even experienced) players in the market.

New to Bitcoin? Check out CoinGeek’s Bitcoin for beginners Section, The Ultimate Resource Guide to learn more about Bitcoin – as envisioned by Satoshi Nakamoto – and the blockchain.

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