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The Securities and Exchange Commission (SEC) has charged Shopin’ founder Eran Eyal of defrauding investors through an initial coin offering (ICO) that raised $42 million from August 2017 to April 2018. The announcement was made through a press release published on Wednesday, Dec. 11.
According to the filing, Eyal committed fraudulent securities offering by selling Shopin’ Tokens to investors through the ICO. The raised fund was meant to be allocated to the creation of a blockchain-based shopper profile that would monitor an individual’s purchasing behavior and record it on the ledger.
The accumulated data would then be used to offer users products that are associated with the previous item that was purchased. The SEC said that Shopin’ never create such a platform.
Eyal spends funds on personal use
Aside from dangling a promising product, Eyal and his company also told investors that they’ve collaborated with established retailers and a prominent figure in the crypto industry. Such a partnership was never struck. The regulatory agency also said that Eyal spent $500,000 of the fund for personal use.
“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," said Marc P. Berger, Director of the SEC's New York Regional Office. “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.”
Dropping out of the web
After news broke out, Eyal disappeared from his social media platforms, with his Facebook and Twitter accounts no longer accessible. His Telegram account has also vanished despite his recent communication with investors.
Stephen Timm of Ventureburn reached out to Eyal to get a comment and the accused responded with:
Hi Stephen, hope you’re well
I cannot give any comment at this time
Wishing you the best.
Eran
This isn’t the first time that Eyal got in trouble for similar charges. Prior to this development, he was also charged with defrauding investors $600,000 by misrepresenting the staff and clients of his previous company, Springleap. As for the specific charges that SEC will seek, the agency said:
“The SEC's complaint, filed in federal district court in Manhattan, charges Eyal and Shopin with violating the antifraud and registration provisions of the federal securities laws, and seeks permanent injunctions, disgorgement with interest, and civil penalties, as well as an officer-and-director bar against Eyal and a bar against Eyal and Shopin prohibiting them from participating in any future offering of digital-asset securities.”
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