US court recognizes CMCT token ICO as an unregistered securities offering

The issuers of the asset, Crowd Machine and Metavine, were found guilty in an SEC lawsuit and must pay more than $20 million in fines

24.01.2024 - 09:45

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2 min

What’s new? The US court has found the initial coin offering (ICO) of the Crowd Machine Compute (CMCT) token conducted in 2018 to be an unregistered offering of securities and ordered its issuers to pay more than $20 million in fines, penalties, and restitution. The lawsuit against Crowd Machine and Metavine was filed by the Securities and Exchange Commission (SEC) in January 2022.

The court’s decision

What else is known? CMCT was designed to reimburse computer owners for the use of their computing power and pay programmers for writing code, but it was never used for its intended purpose. The SEC called the coin distribution a fraud and a violation of the Securities Act, and accused project founder Craig Sproule of embezzling $5,8 million of the $33 million raised.

Sproule founded software development platform Metavine in 2013 and cloud platform Crowd Machine in 2018. Metavine filed for bankruptcy on January 3 of this year.

The court also ordered the winding down of CMCT and removal of the asset from the only crypto exchange where it was traded.

In a statement following the meeting, the SEC stressed that back in 2017 it recognized ICOs as a sale of securities and has since filed numerous cases against issuers who launched cryptocurrencies in this format. Among them is the fintech company Ripple, which developed the payment protocol of the same name: the parties have been arguing in court about the status of its XRP token since 2020.