The US Securities and Exchange Commission (SEC) on Thursday accused a crypto startup Crowd Machine and its Australian founder Craig Sproule of defrauding investors.
Per the SEC lawsuit, the company had raised millions from investors, in 2018, through a “fraudulent and unregistered” initial coin offering (ICO).
Furthermore, Sproule has been charged for allegedly diverting more than $5.8 million from ICO proceeds to South African gold mining entities. He had previously promised investors that the funds will be utilized in developing new technology for Crowd Machine’s subsidiary firm Metavine Inc.
“As alleged, Sproule and Crowd Machine misled investors about how they were using ICO proceeds, spending funds on an entirely unrelated scheme,” said Kristina Littman, Chief of the SEC Enforcement Division’s Cyber Unit.
The Aussie man, who self-proclaims himself on social media as the “Man Behind the Machine,” claimed to have collectively raised the equivalent of $40.7 million through the sale of “unregistered” Crowd Machine Compute Tokens (CMCT).
Notably, the actual proceeds raised from CMCT sales seemed to be lesser than what Sproule claimed to have raised. The Crowd Machine Group had actually collected the equivalent of $33.5 million, based on the market values of Bitcoin and Ethereum at the time of ICO, the complaint added.
More ICO Frauds Caught
Scams and fraud in ICOs are one of the greatest challenges and threats to the crypto and DLT community. Ex-SEC chair Jay Clayton had previously expressed his disbelief at the levels of fraud being committed in the ICO market.
The SEC has also been vigilant over a number of fraudulent securities offerings. The watchdog, for instance, filed a similar complaint last year against Loci Inc. and its CEO John Wise for making materially false and misleading statements related to an unregistered ICO.
In this Crowd Machine’s ICO case filed in the United States District Court for the Northern District of California, Sproule…
