SEC Charges Australian ‘Man Behind the Machine’ in $41M Crypto Fraud Scheme – Regulation Bitcoin News

The US Securities and Exchange Commission (SEC) has indicted an Australian citizen calling himself the “Man behind the Machine” in a fraudulent crypto scheme that raised nearly $ 41 million. He and his companies made “materially false and misleading statements in connection with an unregistered offering and sale of digital asset securities.”

‘Man behind the machine’ indicted by SEC

The SEC on Thursday announced charges against Australian citizen Craig Sproule and two companies he founded for “defrauding investors.” The two companies are Crowd Machine Inc. and Metavine Inc.

The SEC alleged that they made “materially false and misleading statements in connection with an unregistered offering and sale of digital asset securities.”

The securities regulator explained that Sproule referred to himself in social media posts as the “Man behind the machine.” It claimed to have raised $ 40.7 million in an initial coin offering (ICO) of Crowd Machine Compute Tokens (FCTC). The offer occurred between January and April 2018.

Rather than use the ICO’s earnings for the purpose it told investors, the SEC outlined:

Crowd Machine and Sproule began diverting more than $ 5.8 million in ICO revenue to gold mining entities in South Africa, a use that was never disclosed to investors.

The securities watchdog also said Crowd Machine and Sproule did not record their offerings and sales of FCTC tokens. Furthermore, they knowingly sold the tokens without determining whether the investors were accredited.

Kristina Littman, chief of the SEC’s Enforcement Division’s Cyber ​​Unit, commented:

Sproule and Crowd Machine misled investors about how they were using ICO proceeds, spending funds on a completely outsider scheme.

The SEC complaint “accuses Sproule and Crowd Machine of violating the anti-fraud and registration provisions of the federal securities laws.”

The two and alternate defendant Metavine Pty. Ltd., an affiliated Australian entity, consented to the judgments without admitting or denying the allegations.

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 ”. Additionally, FCTC tokens must be deactivated and removed from crypto trading platforms.

Tags in this story

Australian citizen, FCTC, FCTC ICO, FCTC offering, Craig Sproule, collective machine, fraud investors, gold mining, ICO, initial coin offering, man behind machine, metavine, SEC, securities offering, South Africa, offering of tokens

What do you think of this case? Let us know in the comment section.

Kevin helms

Austrian economics student Kevin found Bitcoin in 2011 and has been an evangelist ever since. His interests lie in Bitcoin security, open source systems, network effects, and the intersection of economics and cryptography.

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