A court in California has handed down a significant ruling in a case that has been ongoing for over two years, involving Crowd Machine and Metavine, the creators of Crowd Machine Compute Tokens (CMCT).
The court has ordered them to pay over $20 million in disgorgement, interest, and penalties, and also found the companies’ founder, Craig Sproule, liable for his role in the case.
The legal troubles for Craig Sproule began in January 2022 when the United States Securities and Exchange Commission (SEC) filed a lawsuit against him, alleging that the 2018 initial coin offering (ICO) for CMCT constituted a “fraudulent and unregistered” securities sale.
Alongside this accusation of unregistered securities sales, it was also claimed that Sproule had misused and lost $5.8 million of the $33 million he had raised during the ICO.
CMCT was initially designed with the aim of reimbursing computer owners for lending their computing power and compensating programmers for their coding efforts. Unfortunately, the tokens never became operational.
As part of the initial legal action, Sproule was fined $195,047 and instructed to cease operations of CMCT, including removing it from the one cryptocurrency exchange where it had been listed. Importantly, the defendants did not admit or deny any wrongdoing.
READ MORE: Mt. Gox Trustee Advances Towards Bitcoin Repayments with Identity Verification Confirmation
On January 17, the District Court of Northern California issued an amended final judgment that ordered the defendants to disgorge a total of $19,676,401.27, along with an additional $3.4 million in prejudgment interest.
Furthermore, Metavine was found liable for disgorgement of $5 million of the total amount, and both defendants were directed to pay civil penalties of $600,000 each.
In its statement dated January 24, the SEC highlighted that the previous consent judgments had already resolved the SEC’s action against Mr. Sproule, leaving the court to determine the monetary relief for the remaining defendants.
It is noteworthy that initial coin offerings (ICOs) were once a common method for launching cryptocurrencies until the SEC classified them as securities sales in July 2017.
Subsequently, the SEC has pursued numerous legal cases against ICO issuers.
Craig Sproule founded Metavine in 2013, which is described as a “no-code software development platform.”
However, Metavine reportedly filed for bankruptcy on January 3. On the other hand, Crowd Machine is described as a “unified cloud platform.”
Discover the Crypto Intelligence Blockchain Council
