Shopin Founder and CEO Eran Eyal allegedly spent $500,000 of investor funds on personal expenses.
The United States Securities and Exchange Commission (SEC) has charged Eran Eyal, the founder Shopin, with orchestrating a fraudulent initial coin offering (ICO).
In a press release on Dec. 11, the SEC alleged that the businessman and his company defrauded hundreds of investors in an ICO that raised more than $42 million from August 2017 to April 2018. According to the SEC, Shopin’s actions constituted an unregistered securities offering of Shopin Tokens.
Eyal told investors he would use the funds from the token sale to create blockchain-based shopper profiles. These profiles would then track customer purchase histories across online retailers and recommend products based on this information. However, Eyal never created a functional platform. Marc P. Berger, Director of the SEC’s New York Regional Office said:
“As alleged in today’s action, the SEC seeks to hold Eyal and Shopin responsible for scamming innocent investors with false claims about relationships and contracts they had secured in support of a blockchain-based universal shopper profile […] Retail investors considering an investment in a digital asset that meets the definition of a security must be afforded the same truthful disclosures as in any traditional securities offering.”
Furthermore, Eyal allegedly lied about having forged partnerships with established retail outlets when in fact no such partnerships existed.
The SEC also claims that Eyal misappropriated investor funds to pay for personal expenses. From the SEC complaint:
“Eyal used over $500,000 of investor funds for expenses such as his rent, retail shopping, entertainment, tickets to philanthropic events, and a dating service, but omitted to disclose to investors that he would use any proceeds for his own benefit.”
The commission has charged Eyal and Shopin with violating the anti-fraud and registration provisions of the federal securities laws, and is seeking injunctive relief, disgorgement with prejudgment interest and civil money penalties. The SEC also seeks a bar against Eyal and Shopin prohibiting them from participating in any future securitized token offerings.
Eyal had previously been charged with defrauding investors for $600,000 by misrepresenting the staff and clients of his previous startup, Springleap.
Source: , CoinTelegraph
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