SEC Charges $42M Shopin ICO for Violating Multiple Securities Laws

The United States Securities and Exchange Commission (SEC) has charged UnitedData Inc. (also known as Shopin), and its CEO for conducting an illegal initial coin offering (ICO) that defrauded hundreds of investors to a tune of $42 million. 

According to an announcement by the U.S. financial markets watchdog, the firm’s CEO, Eran Eyal, and his firm conducted the sale of unregistered securities between August 2017 and April 2018 in the form of Shopin Tokens.

During this period, the firm assured investors that the funds raised via the ICO would be used to develop blockchain-based universal shopper profiles and establish a stable alliance with multiple retailers. 

Shopin noted at the time that the initiative would track customers’ purchase histories conducted online and would help them make essential recommendations for related products based on the information collected. 

The SEC stated that investigations revealed that the firm neither created any functional platform nor fulfilled other parts of the agreement, with the financial watchdog adding that Eyal further misappropriated investors’ fund by using at least $500,000 for his personal use, which included rent, shopping, entertainment as well as a dating service.

To this end, the regulators noted that both Eyal and Shopin would be held responsible for scamming and misleading investors under false claims. 

Marc P. Berger, Director of the SEC’s New York Regional Office, was quoted as saying in the report: 

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.

As per the report, the SEC has charged Eyal and Shopin to the federal district court in Manhattan for violating the country’s antifraud and registration provisions of the federal securities laws as well as failure to register the token sale as securities. 

The report further stated that the SEC is seeking that both Eyal and Shopin receive as punishment permanent injunctions, disgorgement of interests, civil penalties, and a total ban from participating in any future token sale. 

In a similar development, 39-year-old Maksim Zaslavskiy pleaded guilty to charges filed against him by the U.S. SEC in an illegal ICO fraud case.