Shopin ICO Charged by US SEC for Breaking Securities Law

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In its long string of crackdowns on ICOs, the SEC Charged a Shopin ICO that raised $42 million during peak token sale season.

The US Securities and Exchange Commission cracked down on another ICO from the boom times of token sales. After receiving complaints, the SEC charged the founders of the Shopin ICO for securities fraud.

Shopin raised as much as $42 million during the token sale running from August 2017 to April 2018. The Shopin platform was supposed to decentralize shopping information and keep a record of online purchases. The reward system based on Shopin Tokens made the SEC deem the asset unregistered security, promising future earnings.

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The SEC reports that the project’s founder, Eran Eyal, lied to investors about Shopin partnerships with big retailers, as well as connections to large crypto entrepreneurs. The SEC also discovered Eyal had misappropriated some of the funds, spending as much as $500,000 for personal expenses and entertainment.

“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.”

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Almost all ICOs are potential targets of the SEC, but the measures remain different. Some projects have folded, while others, like EOS, were only sentenced to a fine and continued operating.

In the case of the Shopin (SHOP) token, it only traded briefly in 2018, when its price tanked over the course of a few days. SHOP has no trading activity now, and the only price action was a crash from $0.03 initial exchange prices to $0.01 before trading was halted.

Shopin saw another glitch after its ICO – a token theft that caused the project to revoke the tokens and promise a re-issue. After a large number of SHOP tokens were stolen from a Japanese syndicate, Shopin decided to bail them out.

The actions, however, were seen as a form of exit scam, and doubts were raised on whether Shopin planned an exit scam. The token itself was not hacked, but only a wallet related to SHOP and the Shopin App.

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