The Securities and Exchange Commission (SEC) has charged another prominent crypto startup founder, arguing that he had misled investors back in 2018.
Australian citizen Craig Sproule is accused of not informing investors how he would use the $41m raised through an initial coin offering (ICO) for Crowd Machine Inc and Metavine Inc, the companies he founded.
A notable part of the proceeds was invested in gold mining entities in South Africa, which was withheld from the investors. Some $5.8m was put into those operations.
Originally, Sproule claimed that he would be investing in technology that would allow Metavine to create app-based software that runs on a decentralized network of the users’ computers.
The regulator also claimed that Crowd Machine and Sproule did not register their sales of the Crowd Machine Computer Tokens (CMCT) properly.
The allegations are reminiscent of complaints lodged against Ripple Labs. However, in Sproule’s case, only a civil penalty seems to have been issued.
The complaint by SEC was filed with the US District Court for the Northern District of California and ordered Sproule to pay a $195,047 civil penalty.
SEC chief of the enforcement division cyber unit Kristina Littman said: “As alleged, Sproule and Crowd Machine misled investors about how they were using ICO proceeds, spending funds on an entirely unrelated scheme.”
Sproule and Crowd Machine consented to the judgements and will no longer be able to participate in any future securities offerings of any kind.