Anyone who has been in the cryptocurrency industry for a significant amount of time will remember the period of 2017 to 2018 as the golden age of ICOs as at the time, they were the primary method of any crypto or blockchain firm to raise capital and were all the rage. At the same time, while ICOs provided a lot of capital-generating avenues for companies, there were also many fraudulent ICOs flooding the market during that time as it was a bit of a wild west. Bodies such as the Secures and Exchange Commission were actively having to shut down several ICOs for this purpose and even though they are not as popular, they continue to make the news.
The latest of this news is regarding Shopin founder Eran Eyal who was recently convicted by Letitia James, the New York Attorney General, over his guilty plea in orchestrating a fraudulent ICO for his company.
According to the December 12, 2019 announcement from the New York Attorney General’s office, the former CEO pled guilty to running a fraudulent ICO between August 2017 and April 2018 which raised $42 million and also of swindling investors of $600,000 by misrepresenting the staff of his former firm, Springvalley.
He was formally charged by the Securities and Exchange Commission yesterday for running an unregistered security offering of Shopin tokens and also for misappropriating investor funds to use for his personal expenses.
“My office won’t allow white collar criminals to get away with their schemes to defraud innocent victims, no matter how complex […] This one individual created company after company after company just to continue cheating investors out of hundreds of thousands of dollars. Using fake product trials and nonexistent contracts with major retailers he was able to lure victims to invest in his technology schemes, including his very own cryptocurrency. We will use every available resource at our disposal to pursue all who attempt to abuse and manipulate the system, because no one is above the law,” Attorney General James said.
He has now been required to pay $125,000 in restitution and $475,000 in judgments to investors as well as surrender the remaining $450,000 in crypto to the Attorney general’s office and will also be stepping down from his position.