Crowd Machine (CMCT)

A 2018 ICO for 'Crowd Machine Compute Tokens' (CMCT) that the SEC charged as fraudulent: founder Craig Sproule raised ~$33M to build a decentralized app platform but secretly diverted $5.8M to South African gold-mining entities. Consent judgments ordered ~$20M+ and barred Sproule as an officer/director.

Also known as: Crowd Machine, CMCT, Crowd Machine Compute Token, Metavine

Summary

Crowd Machine, founded by Australian Craig Sproule (with his company Metavine), ran an initial coin offering of "Crowd Machine Compute Tokens" (CMCT) between January and April 2018, raising about $33 million (Sproule claimed $40.7M). Investors were told the funds would build technology to run app-development software on a decentralized network of users' computers. ^[1]^[2]

The fraud

Per the SEC's January 2022 complaint (its first ICO-fraud charge of that year), Sproule instead diverted more than $5.8 million of ICO proceeds to gold-mining entities in South Africa — a use never disclosed to investors — and made materially false statements. ^[1]^[2]

Outcome

Sproule and the companies consented to antifraud/registration judgments (Jan 2022): Sproule paid a $195,047 penalty, was barred from serving as a public-company officer/director, and the tokens were to be disabled. In January 2024 a court ordered Crowd Machine/Metavine to disgorge ~$19.7M plus ~$3.4M interest and $600K penalties each. ^[1]^[2]

Bracketed numbers refer to the numbered sources listed below.

People & entities involved

Craig SprouleFounderIndividualsAustralian founder of Crowd Machine and Metavine who the SEC said ran a fraudulent CMCT ICO (~$33M) and secretly diverted $5.8M to South African gold mining. He consented to antifraud judgments, a $195K penalty, and an officer/director bar.

Sources (2)

SEC Charges ICO Issuer and Founder with Defrauding Investors (Crowd Machine) — U.S. SEC
SEC v. Crowd Machine, Metavine, and Craig Sproule — amended final judgment — U.S. SEC