The SEC has charged the founder of a cryptocurrency startup with fraud

<p>The Securities and Exchange Commission has charged Australian Craig Sproule, as well as the two startups he founded, Crowd Machine, Inc. and Metavine, Inc., with misleading investors about how he intended to use the proceeds of a $41 million preliminary coin offering (ICO) in 2018.</p> <p>The SEC's lawsuit, which was filed in the United States District Court for the Northern District of California, charges Sproule and Crowd Machine with violating antifraud and registration provisions of federal securities laws. </p> <p>According to the SEC, Sproule has taken to calling himself the "Man Behind the Machine," and claims to have raised $40.7 million through his corporations, collectively known as "Crowd Machine," in an initial coin offering of Crowd Machine Compute Tokens between January and April 2018.</p> <p>The SEC claims that Sproule initially told investors that the ICO proceeds would be used to develop a new technology that would allow Metavine's current application-development software to run on a decentralised network of customers' computers.</p> <p>However, the SEC alleges that Sproule and Crowd Machine spent over $5.8 million in ICO proceeds on gold mining entities in South Africa, which was not disclosed to buyers.</p> <p>Furthermore, the SEC claims that Crowd Machine and Sproule failed to correctly register their offers and gross sales of CMCT tokens with the Fee and knowingly offered the tokens to groups of buyers, together with individuals in the United States, with out first determining whether or not the tokens had been accredited.</p> <p>According to the SEC, this amounts to "materially false and deceptive statements in reference to an unregistered supply and sale of digital asset securities."</p> <p>In a press release, Kristina Littman, Chief of the SEC Enforcement Division's Cyber Unit, stated, "As alleged, Sproule and Crowd Machine misled buyers about how they were utilising ICO proceeds, spending funds on a wholly unrelated scheme." "We will continue to hold accountable issuers of digit