A court in California has ruled that Crowd Machine and Metavine, issuers of Crowd Machine Compute Tokens (CMCT), pay more than $20 million in disgorgement, interest and penalties in a case that began over two years ago. The companies’ founder, Craig Sproule, was also found liable.
Sproule’s troubles began in January 2022, when the United States Securities and Exchange Commission (SEC) filed suit against him claiming that the 2018 initial coin offering (ICO) for CMCT was a “fraudulent and unregistered” securities sale. Besides the claim of unregistered securities sales, it was also alleged that Sproule misused and lost $5.8 million of the $33 million he raised.
CMCT was designed to reimburse computer owners for using their computing power and pay programmers for writing code. The tokens never became operational.
Craig Sproule, CEO @Crowd_Machine rocks Amsterdam Blockchain Expo with no-code dApp Development solution that gets apps to market 45x faster! pic.twitter.com/p4Uu2WGUUu
— Meg V Jones (@MegEmpower) June 28, 2018
Sproule was fined $195,047 and ordered to shut down CMCT and remove it from the one cryptocurrency exchange it had been listed on. The defendants did not admit or deny any wrongdoing.
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Then, on Jan. 17, the District Court of Northern California issued an amended final judgment ordering the defendants to disgorge $19,676,401.27, plus $3.4 million in prejudgment interest. In addition, Metavine was rules to be liable for disgorgement of $5 million of the total. The Court also ordered defendants to pay civil penalties of $600,000 each. The SEC noted in a Jan. 24 statement:
“The prior consent judgments fully resolved the SEC’s action against Mr. Sproule, but left the Court to determine the monetary relief to be paid by the remaining defendants.”
ICOs were a common way to launch a cryptocurrency before the SEC determined in July 2017 that they were securities sales. Since then, the SEC has brought numerous cases against ICO issuers.
Sproule founded Metavine in 2013 and Crowd Machine in 2018. Metavine is described as a “no-code [software] development platform.” It reportedly filed for bankruptcy on Jan. 3. Crowd Machine is a “unified cloud platform.”
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