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The U.S. Securities and Exchange Commission (SEC) has charged an Australian citizen who describes himself as “the man behind the machine” for participating in a fraudulent crypto scheme that raised nearly $41 million. He and his firm made “materially false and misleading statements” regarding the offering and sale of unregistered digital asset securities.
SEC charges ‘people behind the machine’
The U.S. Securities and Exchange Commission on Thursday announced charges of “defrauding investors” against Australian citizen Craig Sproule and two companies he founded. The two companies are Crowd Machine Inc. and Metavine Inc.
SEC allegedly They made “materially false and misleading statements in relation to the offering and sale of unregistered digital asset securities.”
The securities regulator explained that Sproule referred to himself as “the man behind the machine” in social media posts. He claims to have raised $40.7 million in an initial coin offering (ICO) of Crowd Machine Compute Tokens (CMCTs). The offering took place between January 2018 and April 2018.
The SEC did not use the ICO proceeds for what he told investors, but described:
Crowd Machine and Sproule began transferring more than $5.8 million in ICO proceeds to South African gold mining entities — a use that was never disclosed to investors.
The securities regulator also said that Crowd Machine and Sproule did not register offers and sales of their CMCT tokens. Additionally, they knowingly sold tokens without determining whether investors were accredited.
Kristina Littman, head of the SEC’s Enforcement Division’s Cyber ??Division, commented:
Sproule and Crowd Machine are misleading investors about how they can use ICO proceeds and use the funds for completely unrelated initiatives.
The SEC’s complaint “alleges that Sproule and Crowd Machine violated the anti-fraud and registration provisions of the federal securities laws.”
The duo and relief defendant Metavine Pty. Ltd., an affiliated Australian entity, agreed to the judgment without admitting or denying the charges.
They are prohibited from participating in future securities offerings. Sproule is also prohibited from “serving as an officer or director of a public company, and [will be ordered] Pay a civil penalty of $195,047. In addition, CMCT tokens must be disabled and removed from crypto exchanges.
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