The Securities and Exchange Commission (SEC) has revealed an order demanding Crowd Machine, Metavine, and founder Craig Sproule to disgorge $19,676,401.27 raised in an “unregistered and fraudulent offering of crypto asset securities.” Additionally, pre-judgment interest in the amount of $3,358,147.75 is being added to the amount, along with a penalty of $600,000 for each defendant.
Relief defendant and affiliate Metavine Pty. Ltd. must also disgorge $5 million, according to the SEC.
The Court’s final judgment follows an order issued December 5, 2023, granting in part the SEC’s motion for monetary relief. The original complaint was filed on January 6, 2022. The complaint described the offering as rasing money for the development a “global decentralized” peer-to-peer network, or “Crowd Computer”— that allegedly would run a “no-code” application-development software from a network of users’ own devices instead of traditional centralized servers.
The SEC’s complaint charged defendants Crowd Machine and Metavine and founder Craig Sproule for making false and misleading statements in connection with an unregistered offer and sale of crypto asset securities they referred to as “Crowd Machine Compute Tokens” or “CMCTs.” The CMCTs were expected to be used for compensation within the Crowd Machine ecosystem.
The SEC noted that without admitting or denying the allegations, defendants previously consented to the entry of judgments permanently enjoining them from violating the antifraud provisions of Section 17(a) of the Securities Act and Section 10(b) of the Securities Exchange Act of 1934 and Rule 10b‑5 and the registration provisions of Sections 5(a) and (c) of the Securities Act.
The consent judgments, entered January 11, 2022, also enjoined defendants from participating in future securities offerings, ordered them to permanently disable CMCTs in their possession and seek the removal of CMCTs from crypto trading platforms, and as to Sproule, imposed a $195,047 civil penalty and prohibited him from serving as an officer or director of a public company.
The prior consent judgments fully resolved the SEC’s action against Sproule but left the Court to determine the monetary relief to be paid by the remaining defendants.