Following a complaint by the US SEC, Crowd Machine’s founder Craig Sproule faces a lawsuit after raising $33M from unlawful investments, and not being able "to fund continued operations" due to lack of capital.
Following the complaint by the SEC, Crowd Machine's ICO of digital asset securities was named "fraudulent and unregistered", because the company failed to fully establish the project from January to April of 2018 after raising a capital of $33M.
Initially, Crowd Machine was advertised as an "app building and hosting platform" that would let users actualize their website ideas via simplistic website building tools. The company used CMCT tokens as investments to develop the project, reward users for using the platform, and compensate developers for their contributions.
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In spite of that, CMCTs never took in the platform’s environment, and none of the users were awarded any tokens.
In fact, the complaint by the United States Securities and Exchange Commission (or SEC) specifically stated that almost $6M of the ICO funds were allocated to crypto mining farms in South Africa, with no returns of the investment.
SEC came to a conclusion that the token investments fall under "securities" which had to be officially registered. Failing to do so, Sproul, creator of Crowd Machine, will have to pay a $195,047 civil penalty.
Likewise, according to the complaint, Crowd Machine was ordered to cease all operations related to digital assets, stating:
"requiring Defendants Crowd Machine, In. and Metavine, Inc. to undertake to permanently disable all Crowd Machine Compute Tokens (“CMCTS”) in their possession or control within 10 days of the entry of the judgment…"
The CMCT token market data was shut down on the largest crypto price tracker CoinMarketCap. However, it is still available on CoinGecko that shows the average price of CMCT tokens - $0.00005337 and a 21.6% drop in the past 24 hours.
