SEC Files Complaint Against Operator of “Unregistered” $ 33 Million Crowd Machine ICO

SEC Files Complaint Against Operator of “Unregistered” $ 33 Million Crowd Machine ICO

The US Securities Commission has filed a lawsuit against Australian Craig Derel Sproule for the allegedly “fraudulent and unregistered” sale of “digital asset securities” in an initial coin offering (ICO) that your company had carried out in 2018.

The SEC alleges in a Thursday complaint that Sproule’s company, Metavine Inc, operated by the Crowd Machine ICO (FCTC) from January to April 2018, it sold unregistered securities, never made the project operational, and “materially misrepresented how it intended to use ICO proceeds.”

Total, the SEC said Sproule raised at least $ 33 million, but now lacks “sufficient capital to fund continuing operations.” The reason for his lack of funds goes to the heart of the SEC’s case.

A Thursday announcement from the SEC on the case indicates that Sproule agreed to provisions prohibiting him, Crowd Machine and Metavine from further offering securities. They should also “permanently deactivate the FCTC tokens and seek their removal from digital asset trading platforms”. FCTC is currently only available to trade on HitBTC, according to CoinGecko.

Sproule is prohibited from being a director of a public company and has been ordered to pay a fine of $ 195,047.

Although Sproule told investors that the ICO’s proceeds would be used to fund the development of a decentralized peer-to-peer network, The complaint claims that $ 5.8 million of ICO funds were sent to a South African mining operation as a loan or to obtain capital in the company. So far, none of those funds have been recovered and Sproule has not seen any return on investment.

The complaint also details how The FCTC tokens were supposed to go live in the Crowd Computer ecosystem to pay device owners for the use of their computing power and to pay software developers to write code. However, the tokens never became operational in the ecosystem.

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The SEC alleges that the FCTC token is an investment contract, that it is classified as a security and that Crowd Computer and Metavine did not record its sale before the commission:

“Numerous courts have specifically determined that offers and sales of digital assets such as FCTC are investment contracts and, therefore, that such digital assets are” securities “under federal securities laws.”

The question of whether cryptocurrencies should be classified as securities or goods has been at the center of debate in certain circles for quite some time. SEC Chairman Gary Gensler urged crypto companies to “come and talk” with him about the legal status of cryptocurrencies as it pertains to securities laws.

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