SEC Charges Shopin CEO With Fraud Over Unregistered $42M ICO

The U.S. Securities and Exchange Commission (SEC) has charged Shopin and its founder Eran Eyal with fraud after a $42 million initial coin offering.

AccessTimeIconDec 11, 2019 at 9:55 p.m. UTC
Updated Sep 13, 2021 at 11:48 a.m. UTC
10 Years of Decentralizing the Future
May 29-31, 2024 - Austin, TexasThe biggest and most established global hub for everything crypto, blockchain and Web3.Register Now

The U.S. Securities and Exchange Commission (SEC) has charged Shopin and its founder Eran Eyal with fraud after a $42 million initial coin offering.

The SEC announced Wednesday that Eyal had been charged with defrauding investors by selling unregistered securities in the form of Shopin Tokens. While Eyal was supposed to develop a platform which would store and track customer profiles across different retailers, Shopin never built out the system, the agency alleged.

Instead, Eyal "misappropriated investor funds for his personal use," which included a dating service.

Eyal is accused of misappropriating at least $500,000 for his personal use.

A complaint alleges that Eyal "made at least four misrepresentations in marketing" the Shopin token, including by claiming that Shopin had successfully conducted a pair of pilot programs, that the company "had ongoing partnerships" with multiple retailers, that an unnamed "prominent Silicon Valley blockchain entrepreneur" was an advisor to the company and that an unnamed company was an investor in the project.

Eyal also pled guilty to criminal charges brought by the New York Attorney General's office, the release said.

According to a press release shared with CoinDesk on Thursday, Eyal pled guilty to operating three securities fraud schemes, including the Shopin ICO.

Roughly $450,000 in an undisclosed cryptocurrency will be turned over to the New York State Attorney General's office as part of the plea agreement, and Eyal will step down from his role as CEO of Shopin.

He will pay $125,000 in restitution and $475,000 in judgments to investors in Springleap, one of his previous enterprises. Former NYAG Barbara Uunderwood charged him with stealing $600,000 from the company's investors in 2017.

The SEC is also charging Eyal with failing to register the Shopin token sale as a securities sale, and is looking for a permanent injunction, disgorgement, civil penalties, to permanently bar Eyal from acting as an officer or director in any public company, or from participating in any future token sales.

Current NYAG Letitia James reportedly began investigating Shopin and Eyal as far back as June 2019, according to Ventureburn.

Eyal reportedly shared the names and email addresses of his investors with the investigators at the time.

UPDATE (Dec. 12, 2019, 15:35 UTC): This article has been updated with additional information from the New York State Attorney General's office.

Disclosure

Please note that our privacy policy, terms of use, cookies, and do not sell my personal information has been updated.

The leader in news and information on cryptocurrency, digital assets and the future of money, CoinDesk is an award-winning media outlet that strives for the highest journalistic standards and abides by a strict set of editorial policies. In November 2023, CoinDesk was acquired by Bullish group, owner of Bullish, a regulated, institutional digital assets exchange. Bullish group is majority owned by Block.one; both groups have interests in a variety of blockchain and digital asset businesses and significant holdings of digital assets, including bitcoin. CoinDesk operates as an independent subsidiary, and an editorial committee, chaired by a former editor-in-chief of The Wall Street Journal, is being formed to support journalistic integrity.


Learn more about Consensus 2024, CoinDesk's longest-running and most influential event that brings together all sides of crypto, blockchain and Web3. Head to consensus.coindesk.com to register and buy your pass now.