- Crowd Machine held an ICO for its Crowd Machine Compute Token in 2018, but the SEC alleged it was fraudulent and unregistered.
- The SEC filed charges in 2020 against Crowd Machine, its parent company, and founder Craig Sproule for allegedly misusing funds from the $33 million ICO.
- Now, years later, a court has ordered Crowd Machine and its parent company to pay over $20 million in disgorgement and penalties for the illegal ICO.
In 2018, Crowd Machine held an initial coin offering (ICO) for its Crowd Machine Compute Token (CMCT). The SEC alleged the ICO was fraudulent and unregistered. Now, years later, a court has ordered Crowd Machine to pay over $20 million in penalties.
The Promised Token and Its Fate
Crowd Machine founder Craig Sproule claimed CMCT would allow token holders to be paid for contributing computing power. Programmers could also be paid in CMCT for writing code. However, the tokens never became operational.
Charges Brought by the SEC
In January 2020, the SEC filed charges against Sproule, Crowd Machine, and its parent company Metavine. The agency claimed the ICO was an illegal securities sale, and that Sproule misused $58 million of the $33 million raised.
Penalties and Judgments
Sproule was personally fined and ordered to delist CMCT. While not admitting guilt, Crowd Machine and Metavine agreed to stop CMCT. Now, a court has ordered them to pay over $20 million in disgorgement and penalties. Sproule also faces additional fines.
The Aftermath
The charges have led to the downfall of Crowd Machine. The company filed for bankruptcy in early 2023. The case shows the SEC’s crackdown on illegal ICOs in recent years. Crowd Machine serves as a cautionary tale for blockchain startups considering token sales.
