SEC charged Crowd Machine for allegedly making false claims related to an unregistered ICO

The Securities and Exchange Commission (SEC) has charged Australian man Craig Sproule and his two firms, Crowd Machine and Metavine, of making false statements regarding an unregistered Initial Coin Offering (ICO).

SEC charges Crowd Machine over allegedly unregistered ICO

Crowd Machine is allegedly involved in a corporate ICO called Crowd Machine Compute Tokens (CMCT), which took place from January to April 2018.

The SEC claims Sproule has made it public that the proceeds from the ICO will go toward developing new technology for Metavine, allowing the company to run its application development software on a decentralized network. Instead, the SEC claimed Sproule and Crowd Machine transferred $5.8 million to gold mining organizations in South Africa without notifying investors.

Furthermore, the SEC stated that the CMCT sale constituted an unregistered securities offering and that Sproule and his companies knowingly sold tokens without determining whether investors were publicly recognized or not.

The SEC filed its complaint with the U.S. Northern District Court for the Northern District of California, accusing Sproule and Crowd Machine of violating the registration and anti-fraud provisions of federal securities law. Metavine is operating as a mitigating defendant, which means the company is considered an innocent party despite being named in the case, but holds the money on behalf of the accused party, in this case, CrowdFund.

The defendants have not admitted or denied the charges, but they agree to the rulings that prevent them from committing future violations or participating in future securities offerings and will order them to void permanently and seek to delist the CMCT tokens. Sproule also cannot serve as an employee or director of a public company and must pay a fine of $195,047. Any civil disobedience or punishment will be decided by the court in the future.

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