• 451 days Will The ECB Continue To Hike Rates?
  • 451 days Forbes: Aramco Remains Largest Company In The Middle East
  • 453 days Caltech Scientists Succesfully Beam Back Solar Power From Space
  • 853 days Could Crypto Overtake Traditional Investment?
  • 858 days Americans Still Quitting Jobs At Record Pace
  • 860 days FinTech Startups Tapping VC Money for ‘Immigrant Banking’
  • 863 days Is The Dollar Too Strong?
  • 863 days Big Tech Disappoints Investors on Earnings Calls
  • 864 days Fear And Celebration On Twitter as Musk Takes The Reins
  • 865 days China Is Quietly Trying To Distance Itself From Russia
  • 866 days Tech and Internet Giants’ Earnings In Focus After Netflix’s Stinker
  • 870 days Crypto Investors Won Big In 2021
  • 870 days The ‘Metaverse’ Economy Could be Worth $13 Trillion By 2030
  • 871 days Food Prices Are Skyrocketing As Putin’s War Persists
  • 873 days Pentagon Resignations Illustrate Our ‘Commercial’ Defense Dilemma
  • 874 days US Banks Shrug off Nearly $15 Billion In Russian Write-Offs
  • 877 days Cannabis Stocks in Holding Pattern Despite Positive Momentum
  • 878 days Is Musk A Bastion Of Free Speech Or Will His Absolutist Stance Backfire?
  • 878 days Two ETFs That Could Hedge Against Extreme Market Volatility
  • 880 days Are NFTs About To Take Over Gaming?
NFT Craze Could Get Bigger with Youtube

NFT Craze Could Get Bigger with Youtube

YouTube CEO Susan Wojcicki has…

China Has Set Out To Crush Crypto...Again

China Has Set Out To Crush Crypto...Again

The People’s Bank of China,…

  1. Home
  2. Cryptocurrencies
  3. Other

Amazon ‘Competitor’ Charged With Crypto Fraud Scheme

Server room

The US Securities and Exchange Commission (SEC) has charged an individual in the latest crypto scam for defrauding investors by diverting money to South African gold mining companies. Australian cryptocurrency businessman Craig Sproule, via his two companies, Crowd Machine and Metavine, made “materially false and misleading statements in connection with an unregistered offer and sale of digital asset securities,” SEC said.

California-based Crowd Machine, presented by Sproule as a 'decentralized' Amazon Web Services competitor, raised $40 million through an initial coin offering of Crowd Machine Compute Tokens (CMCT) in 2018.

"We want to give everyone the tools to make positive change in their business, which is why we built Crowd Machine on AWS, to use their extensive compute power, depth and breadth of services, and world-class expertise,” Sproule told the media at that time.

Instead, the SEC now alleges that Sproule siphoned $5.8 million into gold mining entities in South Africa. The SEC’s statement of claim says that none of that money has been recovered, while the South African gold mining operations have returned no revenue.

Related: China’s Road To Tech Independence

Sproule has been ordered to pay a $200,000 penalty and is facing a ban from serving as a company director.

“As alleged, Sproule and Crowd Machine misled investors about how they were using ICO proceeds, spending funds on an entirely unrelated scheme,” said Kristina Littman, Chief of the SEC Enforcement Division’s Cyber Unit. Regulators also said that Crowd Machine didn’t register its token sale with the Commission.

While promoting Crowd Machine on social media, Sproule claimed that it was a “live commercial product, battle-tested” by Fortune 500 firms; but the SEC says none of the tech was functional.

Sproule also told investors that CMCT’s price could eventually reach $600; yet, it failed to ever trade higher than $0.085.

In September 2018, CMCT’s price collapsed nearly 90% after a cyber attack led to the theft of more than 1 billion tokens, worth $14 million.

Cryptocurrency crime had a record-breaking year in 2021 with scammers taking in an estimated $14 billion, nearly double compared to 2020, according to blockchain data firm Chainalysis report.

With an 81% increase from 2020, more than $2.8 billion of this 2021 total came from “rug-pulls”, an increasingly popular new scheme in which developers create new crypto tokens and promote them to investors to pump up their value. Once that is achieved, they abandon the project, taking investor funds with them, never to be heard from again. 

The largest rug pull scam went down in Turkey, with Thodex, which saw its mastermind block users’ ability to withdraw their funds and then disappear with $2.6 billion.

In October, Doge-themed Anubis DAO raised $60 million in one day before being rug-pulled by the developer.

One of the most prominent rug pulls of last year involved a token purportedly tied to the hit Korean Netflix drama Squid Game. The SQUID coin surged as high as $2,861 in early November before tanking as the developers made off with an estimated $3.38 million in investor funds.

By Michael Kern for Safehaven.com

More Top Reads From Safehaven.com:

Back to homepage

Leave a comment

Leave a comment