SEC Charges Shopin Founder with fraud over unregistered $42M ICO

Shopin founder charged by SEC for running $42 million scam cryptocurrency ICO

The US Securities and Exchange Commission (SEC) has charged the founder of Shopin, Eran Eyal, for allegedly running $42 million scam ICO.

The Securities and Exchange Commission today charged a digital-asset entrepreneur and his company with defrauding investors in an initial coin offering (ICO) that raised more than $42 million from hundreds of investors.” reads the press release published by SEC.

Eran Eyal, the founder of UnitedData, trading as Shopin, is accused of having operated an unregistered ICO without any project and documentation.

Eyal launched an Initial Coin Offerings (ICOs) to raise funding to create universal shopper profiles, maintained on the blockchain, that would track customer purchase histories across online retailers and recommend products based on the collected data. The problem is that SEC believes that Shopin never created a functional platform.

Unfortunately, fraudulent ICOs are not a rarity over the years the media reported several cases of exit scams.

“As alleged in the SEC’s complaint, Shopin never created a functional platform. The complaint further alleges that Eyal and Shopin repeatedly lied to investors in connection with its offering, including misrepresentations about purported partnerships with certain well-known retailers and about the involvement of a prominent entrepreneur in the digital-asset space.” continues the SEC’s compliant. “The SEC also alleges that Eyal misappropriated investor funds for his personal use, including at least $500,000 used for rent, shopping, entertainment expenses, and a dating service.”

According to the SEC’s compliant Eyal misappropriated investor funds, at least $500,000, for his personal use, including a dating service.

“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.”

Investors in the Shopin ICO who believe they may be a victim should contact the SEC at its TCR page.

Eyal also pled guilty to criminal charges brought by the New York Attorney General’s office, the man pled guilty to operating three different securities fraud schemes, including the Shopin ICO.

According to CoinDesk, 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. Eyal will also step down from his role as CEO of Shopin and he will pay $125,000 in restitution and $475,000 in judgments to investors in Springleap, one of his previous enterprises.

On August 2018, Attorney General Barbara Underwood charged the man with stealing $600k from the investors of Springleap global crowdsourcing company.

[adrotate banner=”9″]

[adrotate banner=”12″]

Pierluigi Paganini

(SecurityAffairs – Shopin, ICO)

[adrotate banner=”5″]

[adrotate banner=”13″]

Pierluigi Paganini

Pierluigi Paganini is member of the ENISA (European Union Agency for Network and Information Security) Threat Landscape Stakeholder Group and Cyber G7 Group, he is also a Security Evangelist, Security Analyst and Freelance Writer. Editor-in-Chief at "Cyber Defense Magazine", Pierluigi is a cyber security expert with over 20 years experience in the field, he is Certified Ethical Hacker at EC Council in London. The passion for writing and a strong belief that security is founded on sharing and awareness led Pierluigi to find the security blog "Security Affairs" recently named a Top National Security Resource for US. Pierluigi is a member of the "The Hacker News" team and he is a writer for some major publications in the field such as Cyber War Zone, ICTTF, Infosec Island, Infosec Institute, The Hacker News Magazine and for many other Security magazines. Author of the Books "The Deep Dark Web" and “Digital Virtual Currency and Bitcoin”.