The SEC filed complaints against the Crowd Computer ICO sales that reportedly sold tokens to Americans as “investment contracts” which the SEC classifies as securities so let’s read more today in our cryptocurrency’s latest news.
The SEC files complaints and also filed a suit against the Australian Craig Derel Sproule for fraudulent and unregistered sale of digital asset securities in the Initial Coin Offering his company conducted in 2018. the SEC alleged in the complaint that Sproule’s company Metavine Inc that operated the ICO For Crowd Machine in 2018, sold unregistered securities and never made the project operational, and misrepresented how it intended to use the ICO proceeds. In total, the SEC says Sproule raised $33 million dollars but that he now lacks enough capital to fund the continued operations. The reason for the lack of funds goes to the core of the SEC case. Accoridng to an announcement from the SEC regarding the case, Sproule agreed to provisions that prohibit him and Crowd Machine from performing more securities offerings.
They will also have to disable the CMCT tokens permanently and seek their removal from the digital asset trading platforms. CMCT is now only available for trade on HitBTC. Sproule is banned from becoming an officer of a public company and has to pay a hefty fine. Sproule told investors that the ICO proceeds will be used to fund the development of the decentralized peer-to-peer network, the complaint did say that $5.8 million of the ICO funds were sent to a South African mining operation as a loan for equity in the company. So far, none of the funds have been recovered.
The complaint also shows that the CMTC tokens were supposed to be made operations in the Crowd Computer ecosystem and pay the device owners for their computer usage and to pay software developers for writing the code. The tokens however never became operational. The SEC alleges that the CMCT are investment contracts that are classified as securities and that the Crowd Computer and MEtavine didn’t register the sale with the regulator:
“Numerous courts have found specifically that offers and sales of digital assets like CMCTs are investment contracts, and therefore that such digital assets are “securities.”
The question of whether cryptocurrencies should be classified as securities or commodities is still a question of debate. The SEC chair Gary Gensler urged crypto companies to talk to him about his legal stance on crypto and the securities laws.