The United States Securities and Exchange Commission (SEC) has dragged the founders of Shopin (SHOPIN) to court for organizing a fraudulent initial coin offering (ICO) that enabled them to sell unregistered securities to investors from August 2017 to April 2018, according to a press release on December 12, 2019.
SEC Shuts Down Shopin
Shopin (SHOPIN), a crypto-powered platform that claims to function as a “universal shopper profile” that provides users with a more personalized shopping experience on retailer websites through blockchain technology and artificial intelligence (AI), has incurred the wrath of the SEC.
As stated in a press release, Shopin and its founders have been charged with defrauding unsuspecting investors in its initial coin offering that generated $42 million from August 2017 to April 2018.
Reportedly, during Shopin’s ICO campaign, Eral Eyal founder of UnitedData, the parent company of the Shopin project allegedly deceived investors into believing that the firm had formed solid alliances with some highly reputed Silicon Valley big whales and retailers.
What’s more, the organizers of the Shopin ICO also promised investors that the funds generated during the campaign will be channeled into creating universal shopper profiles stored on a distributed ledger that would keep immutable records of customer purchase histories across a vast array of online retailers and recommend products that best suits their shopping habits.
However, Eyal and his team allegedly failed to deliver on their promises, misappropriating investors’ hard-earned money for their personal expenses including $500,000 used for entertainment expenses, rent and dating service.
Against that backdrop, Eyal and Shopin have been charged with violating anti-fraud and registration provisions of the federal securities laws. As such, the court now seeks permanent injunctions, disgorgement with interest, civil penalties and has also barred Eyal and Shopin from organizing any form of digital assets securities offering in future.
Commenting on the indictment, Marc P. Berger, Director of the SEC’s New York Regional Office declared 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.”
“Retail investors interested in investing in a digital asset that meets the definition of a security must be provided with the same truthful disclosures as in any traditional securities offering,” he added.
It’s worth noting that the SEC and other top U.S financial watchdogs have not been making life easy for ICO platforms and crypto project organizers.
Facebook’s Libra global stablecoin project is yet to gain the nod of regulators both at home and abroad.
Earlier in October, BTCManager informed that the SEC had ordered Telegram to halt the launch of its cryptocurrency, GRAM, alleging that the firm organized an illegal ICO.