How did Australian crypto entrepreneur Craig Sproule defraud investors?

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How did Australian crypto entrepreneur Craig Sproule defraud investors?

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Image source: © Peshkov | Megapixl.com

Highlights 

  • Crypto-scamming has accelerated in tandem with the rise in the popularity of cryptos.
  • In Australia, investors has faced a significant loss after crypto businessman Craig Sproule defrauded them of their funds.

Crypto -scamming has accelerated in tandem with the rise in the popularity of cryptos. Even well-known businesses have begun to use crypto space to defraud individuals out of their hard-earned money. One such incidence recently occurred in Australia, where investors faced a significant loss after Australian crypto businessman Craig Sproule defrauded them of their funds.

Recent Article: Crypto Scams that made headlines in 2021

Let's look at who Craig Sproule is and how he defrauded crypto investors.

Who is Craig Sproule and why is he in news? 

Craig Sproule is the CEO and founder of Crowd Machine. Crowd Machine aimed to create a distributed blockchain solution for Amazon Web Services, a cloud-based computer infrastructure.

He previously formed Metavine, a prominent systems integration company that accomplished hundreds of enterprise-class development engagements in various industries.

Recently, the US Securities and Exchange Commission (SEC) charged crypto entrepreneur Craig Sproule for defrauding investors by transferring millions from a digital coin offering to South African gold mining operations, without investors’ knowledge.

What are the charges US Sec filed against Craig Sproule?

The SEC filed a case in the US District Court for the Northern District of California, accusing Crowd Machine and Metavine along with Sproule with violating federal securities laws' registration and antifraud provisions.

According to the SEC, Sproule and two of his companies, Metavine, Inc. and Crowd Machine, Inc., allegedly made false and misleading assertions concerning an unregistered sale and offer of digital asset securities.

Sproule has been fined US$200,000 and will be barred from functioning as a director of the company, while Crowd Machine's digital tokens will be blacklisted from crypto trading platforms.

Sproule allegedly amassed US$40.7 million in an initial coin offering (IOC) of Crowd Machine Compute Tokens (CMCT) during first four months of 2018, with an aim to construct a decentralised computer network.

Sproule instead invested US$5.8 million in gold mining companies in South Africa, a fact that was never revealed to Crowd Machine token holders. According to the SEC's statement of claim, none of the US$5.8 million has been recovered, and the South African gold mining companies have generated no revenue.

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What’s next?

We've learned from all of these occurrences that anyone can enter the crypto realm at any time and con investors out of their money. As a result, investors should always exercise caution when investing in cryptocurrencies, and should conduct thorough research before investing their funds.

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