The Securities and Exchange Commission (SEC) has obtained a Court order against Crowd Machine, Inc. and Metavine, Inc.
The United States District Court for the Northern District of California has issued an amended final judgment ordering defendants Crowd Machine, Inc. and Metavine, Inc. to disgorge $19,676,401.27 raised from investors in an unregistered and fraudulent offering of crypto asset securities, plus $3,358,147.75 in prejudgment interest. The Court held relief defendant and affiliate Metavine Pty. Ltd. liable, jointly and severally with the defendants, for disgorgement of $5 million.
The Court also ordered defendants to pay civil penalties of $600,000, each.
The SEC’s complaint charged defendants Crowd Machine and Metavine and founder Craig Sproule for making materially false and misleading statements in connection with the unregistered offer and sale of crypto asset securities they referred to as “Crowd Machine Compute Tokens” or “CMCTs.”
Without admitting or denying the SEC’s 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 of 1933 (“Securities Act”) and Section 10(b) of the Securities Exchange Act of 1934 and Rule 10b-5 thereunder, and the registration provisions of Sections 5(a) and (c) of the Securities Act.
The consent judgments 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 Mr. Sproule, but left the Court to determine the monetary relief to be paid by the remaining defendants.
The Court’s final judgment followed an order, issued December 5, 2023, granting in part the SEC’s motion for monetary relief. Among other rulings, the Court declined defendants’ request to deduct from their disgorgement the “costs incurred to initiate the unlawful and unregistered sale of securities, such as marketing and consulting costs to further the sale,” “costs to mint” CMCTs “to sell in an unregistered offering that was itself infected by fraud,” legal fees incurred in “defending the fraud itself after the fact,” post-offering “depreciation of crypto assets taken by fraud,” and accrued but unpaid expenses including employee salaries.
This news is republished from another source. You can check the original article here