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

The U.S. Securities and Exchange Commission (SEC) has charged an Australian citizen who called himself the “Man behind the Machine” in a fraudulent crypto scheme that raised almost $41 million. He and his companies made “materially false and misleading statements in connection with an unregistered offer and sale of digital asset securities.”

‘Man Behind the Machine’ Charged by SEC

The SEC announced Thursday 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 offer and sale of digital asset securities.”

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

He told investors that he would not use the ICO funds for this purpose. Instead, the SEC explained:

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

Crowd Machine and Sproule also failed to register offers and sales for CMCT tokens. They also sold tokens to investors without verifying that they were accredited.

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

Sproule, Crowd Machine and Crowd Machine deceived investors by claiming that they used ICO proceeds for a totally unrelated purpose.

The SEC’s complaint “charges Sproule and Crowd Machine with violating the antifraud and registration provisions of the federal securities laws.”

They were joined by relief defendant Metavine Pty. Ltd., an Australian affiliate, agreed to the judgments, but did not admit or deny the allegations.

Participation in future securities offerings is prohibited for them. Sproule is also prohibited “from serving as an officer or director of a public company, and [will be ordered] to pay a $195,047 civil penalty.” Furthermore, the CMCT tokens must be disabled and removed from crypto trading platforms.

This story contains tags
Australian citizen, CMCT ICO. CMCT offering. Craig Sproule crowd machine defrauding investors. Gold Mining. ICO. Initial coin offering. Man behind the machine. SEC. Securities offering. South Africa. Token offering.

How do you feel about the case? Comment below to let us know your thoughts.

Kevin Helms

Kevin, a student of Austrian Economics and evangelist since 2011, discovered Bitcoin. His main interests are in Bitcoin security, open source systems, network effects, cryptography, and intersections between economics, cryptography, and Cryptography.

Images CreditsShutterstock. Pixabay. Wiki Commons

DisclaimerThis information is provided for educational purposes only. It does not constitute an offer, solicitation, or recommendation of any company, products or services. is not a provider of investment, tax, legal or accounting advice. The author and the company are not responsible for any loss or damage caused by the content or use of any goods, services, or information mentioned in the article.

Get more Crypto News at CFX Magazine