US SEC indicts Shopin founder for $42 million ICO fraud

According to the official press release on 11th December 2019 the US Securities and Exchange Commission unveiled a forty-two million US dollars ($42 million) ICO fraud committed by Eran Eyal, founder of Uniteddata Shopin, provider of AI and blockchain-based retail solutions.

Amid dozens of new tokens and coins being launched each month along with an ever-increasing appetite for new investment opportunities, the United States federal agency is continually looking over its shoulders for suspicious activities in the financial and investment space.

US SEC unveils another ICO fraud

In the latest, the SEC charged the digital assets businessman and his company for conducting an unapproved initial coin offering (ICO) that managed to raise millions by allegedly defrauding investors. According to the official charge sheet, Eyal carried out illegal securities offering through the sale of the company’s native Shopin tokens. 

Apparently, the money raised was supposed to be utilized towards designing a blockchain-empowered platform with consumers’ profiles. And while Eyal convinced his investors that the platform would be used to track their shopping history and offer shopping recommendations based on their preferences, the SEC alleges that it was, in fact, never designed, thus charging Eyal and his company for promoting false information.

Unfortunately, it didn’t end here for Shopin and its founder. The SEC further went on to claim that Eyal fabricated stories of potential collaborations in future and the firm’s association with prominent retailers in an attempt to gain trust and investments. The money raised was then used to fulfil his lavish lifestyle requirements, with records of at least five hundred thousand US dollars ($500,000) being spent on rent, dating service, shopping and recreation facilities.

Marc Berger, Director of the SEC’s New York Regional Office, stated in the complaint that Eyal has, no doubt, scammed and deceived innocent investors by misappropriating information. Any retail investments in the digital assets space that meet the guidelines of security must disclose accurate information to the investors at all times, just as in the case of conventional securities offerings, Berger explained.

Thus, Eyal and Shopin will face charges for breaching the antifraud and registration policies set forth by federal securities. Besides civil penalties, he will be barred by conducting or participating in any digital asset securities offerings in the future.

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