Court orders payment of $20M in Crowd Machine 2018 ICO case.

A California court has ordered Crowd Machine and Metavin, issuers of Crowd Machine Compute Tokens (CMCT), to pay more than $20 million in disgorgement, interest and penalties in a lawsuit that began two years ago. The companies' founder, Craig Sproule, was also found guilty.

Prowl's troubles began in January 2022 when the United States Securities and Exchange Commission (SEC) filed charges against CMCT, alleging that its 2018 initial coin offering (ICO) was a “fraudulent and unregistered” sale of securities. In addition to claims of unregistered securities sales, Sproule allegedly misappropriated $5.8 million of the $33 million he raised.

CMCT was designed to compensate computer owners for using their computing power to write code for programmers. The tokens are not activated.

Craig Sproule, CEO @Crowd_Machine Rock Amsterdam Blockchain Expo No-code dApp development solution brings apps to market 45x faster! pic.twitter.com/p4Uu2WGUUU

— Meg V Jones (@MegEmpower) June 28, 2018

Sproule was ordered to pay a $195,047 fine and shut down CMCT and delist it from one cryptocurrency exchange. The defendants neither admitted nor denied wrongdoing.

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Then on January 17, the Northern California District Court entered an amended final judgment ordering the defendants to forfeit $19,676,401.27 plus $3.4 million in prejudgment interest. There was also a rule that Metavin was responsible for disbursement of $5 million of the total. The court also ordered the defendants to pay civil penalties of $600,000 each. In a Jan. 24 statement, the SEC noted:

“The earlier consent judgments dismissed the SEC's action against Mr. Sproul in its entirety, but left the court to determine monetary relief to be paid by the remaining defendants.”

Before the SEC ruled that they were securities sales in July 2017, ICOs were a common way to launch cryptocurrency. Since then, the SEC has brought several cases against ICO issuers.

Sproule founded Metavine in 2013 and Crowd Machine in 2018. Metavine “No code [software] development platform” was reported to have filed for bankruptcy on January 3. Crowd Machine is an “integrated cloud platform”.

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