2017’s amplified mechanism of Initial Coin Offering to raise funds from the public is almost dead in 2019. Many ICOs have been and are caught with doing nothing than fake promises. SEC recently charged founder of one such ICO who allegedly behind $42 million ICO project dubbed “shopin”.

US Securities and Exchange Commission (SEC) announced on Wednesday, stating that it has charged Shopin as well as its founder Eran Eyal on account of swindling investor’s money by selling unregistered securities called “Shopin token”. Accordingly, the agency alleged that the founder didn’t provide the promised system that he stated, would store and track customer’s profiles across several retailers. SEC notes that Eyal used the investor’s fund for his personal use. Notably, he misappropriated at least $500,000 for his personal use including rent, shopping, entertainment expenses, and a dating service.

Per the reports, Eyal raised over USD 40 million by selling unregistered Shopin tokens from August 2017 to April 2018 without actually creating anything functional. The agency reports it as follows;

“Shopin aimed to use the funds from the sales of the Shopin Tokens to create universal shopper profiles, maintained on the blockchain, that would track customer purchase histories across online retailers and recommend products based on this information.” 

Besides failing to build any platform as promised, Eyal reportedly misrepresented various facts including Shopin’s partnership with few well-known retailers and its co-relation with notable entrepreneurs in crypto-blockchain space. Nevertheless, Marc P. Berger—director of the SEC’s regional office in New York—stated that;

“As alleged in today’s action, the SEC seeks to hold Eyal and Shopin responsible for scamming innocent investors with false claims about relationships and contracts they had secured in support of a blockchain-based universal shopper profile.”

There are several such cases that SEC has been cracking down and charging companies and founders on defrauding investors. The latest in a list of unregistered securities which SEC has filed, includes, Telegram’s ICO of GRAM token which has raised $1.7 billion in an unregistered ICO according to SEC. However, the law agency quickly filed an action against Telegram’s GRAM ICO last October.

As for Eyal and Shopin, the SEC is seeking civil penalties, disgorgement, and permanent injunctions. It also seeks Eyal to disallow participating in any future token sales.

Image Source – Flickr

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