Crowd Machine, Inc.

đź”´ High Risk

Crowd Machine, Inc.’s case demonstrates how a cryptocurrency ICO can create serious investor-protection and financial-integrity risks when promoters’ stated use of proceeds differs from the actual destination of funds. The SEC alleged that the company, its affiliate Metavine, and founder Craig Sproule raised roughly $33.5 million through CMCT token sales while representing that investor money would fund a decentralized-computing platform, yet more than $5.8 million was allegedly diverted to South African gold-mining businesses and at least $5 million was moved to an affiliated Australian entity. The alleged commingling of ICO proceeds and cross-border affiliate transfers complicated transparency around ownership and use of funds. However, the U.S. action was a civil securities-fraud and unregistered-offering case—not a proven criminal money-laundering case—and the defendants resolved it without admitting or denying the SEC’s allegations. The court ultimately imposed major disgorgement, interest, penalties, token-disablement measures, and a public-company officer-and-director bar against Sproule.

Crowd Machine, Inc. was a Delaware corporation and part of a group of entities controlled by Craig Sproule that marketed the CMCT token offering in 2018. The SEC alleged that the group raised roughly $33.5 million in actual proceeds—while publicly claiming $40.7 million—to finance a decentralized computing platform intended to run Metavine software across users’ devices. According to the complaint, that platform was never operationalized, and CMCT purchasers never received the promised token utility. The SEC alleged that, as ICO proceeds arrived, Crowd Machine and related entities transferred more than $5.8 million to foreign gold-mining companies, predominantly in South Africa, as loans or equity investments. The regulator said this use was unrelated to the disclosed technology project and was never revealed to investors. It also alleged that proceeds were commingled among entities and moved among affiliated accounts, including transfers totaling at least $5 million to Metavine Pty. Ltd. The legal outcome was a U.S. civil securities enforcement resolution with injunctions, token-disablement requirements, an officer-and-director bar for Sproule, disgorgement, interest, and penalties. For accuracy, the case should be described as alleged ICO fraud, misrepresentation, unregistered securities sales, and suspicious cross-border fund movement—not as a proven U.S. money-laundering case.

Countries Involved

The principal jurisdictions connected to the Crowd Machine matter were the United States, Australia, South Africa, and the Cayman Islands. The United States was the enforcement venue and a central operational jurisdiction. The SEC brought the case in the Northern District of California, and its complaint states that Crowd Machine, Inc. was a Delaware corporation that shared a Scotts Valley, California principal place of business with Metavine, Inc. The U.S. connection also included ICO marketing accessible to U.S. investors, participation by U.S. investors, alleged sales to ICO pools that included U.S. persons, and use of interstate commerce and U.S.-linked online communications. Australia was relevant because Craig Sproule was an Australian citizen and Metavine Pty. Ltd. was an Australian affiliate based in Queensland. South Africa was central to the alleged diversion of over $5.8 million in ICO proceeds to gold-mining companies, through purported loans and equity investments. The Cayman Islands were involved through Crowd Machine SEZC, a Cayman special economic zone company wholly owned by Metavine, which was established for the ICO and later entered voluntary liquidation. These multinational links are relevant to an AML-style risk assessment, particularly because funds moved between affiliated companies in different jurisdictions and then to foreign mining operations. Nonetheless, the documented U.S. case alleges fraud and securities-registration violations, not laundering.

 

The SEC publicly announced the Crowd Machine enforcement action on January 6, 2022, the same date it filed its complaint in the Northern District of California. The alleged misconduct itself occurred mainly during the CMCT ICO between January and April 2018. According to the SEC, the companies began sending money to foreign gold-mining entities in April 2018, while investors were transferring substantial funds to Crowd Machine-controlled digital-asset wallets and bank accounts. The SEC’s release reported that Sproule and Crowd Machine claimed to have raised $40.7 million, while the complaint stated that actual receipts appeared to be approximately $33.5 million based on the market values of the Bitcoin and Ether collected. The difference reflected an alleged $7.25 million purported purchase attributed to a Malaysian gold-mining company, of which the SEC said only $250,000 was actually collected and the remaining amount was not received. The court later issued its amended final judgment and disgorgement order on January 17, 2024. That order followed a December 5, 2023 ruling that determined disgorgement and penalties against Crowd Machine and Metavine. The SEC’s documented timeline thus provides a clear distinction: 2018 for the token sale and transfers, 2022 for public U.S. enforcement action, and 2023–24 for monetary remedies.

 

Crowd Machine Compute Token (CMCT); Bitcoin (BTC); Ether (ETH); U.S. dollars (fiat proceeds also received).

The official allegations were securities fraud and an unregistered offer and sale of securities, rather than money laundering. The SEC alleged violations of Sections 5(a), 5(c), and 17(a) of the Securities Act of 1933, Section 10(b) of the Securities Exchange Act of 1934, and SEC Rule 10b-5. In practical terms, the SEC accused Crowd Machine, Metavine, and Sproule of selling CMCT tokens without an effective registration statement or valid exemption and of making materially false or misleading statements about the planned use of ICO proceeds. The SEC’s central fraud allegation was that defendants represented ICO funds would support development and marketing of the decentralized Crowd Computer technology and related CMCT ecosystem, but allegedly allocated more than $5.8 million to unrelated foreign gold-mining businesses. The commission said this intended use had not been disclosed and would have been material to investors’ decisions. If this case is being assessed through an AML or financial-crime lens, the most defensible label is: alleged diversion/misappropriation of ICO proceeds, cross-border fund movement, and alleged affiliate commingling associated with a U.S. securities-fraud scheme. Calling the conduct “money laundering” without qualification would overstate the record and imply a criminal allegation that the public SEC materials do not show.

 

The principal defendant entities were Crowd Machine, Inc. and Metavine, Inc., both controlled by founder Craig Derel Sproule. Crowd Machine, Inc. was incorporated in Delaware in 2018 and wholly owned by Metavine, Inc. Metavine, Inc. was a Delaware company that had been incorporated in 2013 under a prior name and maintained its principal place of business in Scotts Valley, California. The SEC alleged that both companies, along with Crowd Machine SEZC, operated under the shared “Crowd Machine” name and did not maintain substantive distinctions in their ICO operations. Crowd Machine SEZC, a Cayman Islands special economic zone entity, was also wholly owned by Metavine and had been formed for the token offering; it was not named as a defendant in the main caption cited here but was described as part of the group that received ICO proceeds. Metavine Pty. Ltd., based in Queensland, Australia, was identified as a relief defendant because it allegedly received funds linked to the ICO but was not accused of the core securities violations in the same way as the primary defendants. The SEC also referenced foreign gold-mining companies, predominantly in South Africa, as recipients of over $5.8 million. The public complaint does not, in the material retrieved, provide a complete, verified list of recipient mining-company names.

 

No PEP involvement is identified in the SEC’s complaint, press release, or final judgment. A politically exposed person, or PEP, is generally a person entrusted with a prominent public function, such as a senior government official, senior political figure, high-ranking state-owned-enterprise executive, judge, military official, or a close family member or associate of such a person. The SEC’s public materials identify Craig Sproule as an Australian citizen, founder, principal, and controlling shareholder of Metavine, Inc.; they do not identify him as a PEP. The listed companies—Crowd Machine, Metavine, Crowd Machine SEZC, and Metavine Pty. Ltd.—are described as private commercial entities, not state-owned companies or government-connected bodies. The SEC documents also do not identify any public official, political party, state institution, government procurement channel, or politically connected person in connection with the South African gold-mining recipients. This absence is important because neither foreign mining activity nor cross-border fund transfers alone establishes PEP exposure. An institution conducting enhanced due diligence would still want to identify the beneficial owners, directors, and counterparties of the recipient gold-mining entities, especially given the cross-border movement of funds and the high-risk extractive-industry context. But that would be a risk-control step, not evidence that a PEP participated in the Crowd Machine conduct. On the present public record, the correct classification is No identified PEP involvement.

 

N/A

N/A

The SEC’s allegations describe a flow of funds beginning with CMCT ICO investors, including U.S. and foreign participants, who transferred Bitcoin, Ether, and U.S. dollars in exchange for promised token allocations. The SEC alleged that those assets entered digital-asset wallets and bank accounts jointly controlled by Metavine, Crowd Machine, and Crowd Machine SEZC, with Sproule exercising exclusive control over the proceeds. In a conventional financial-crime analysis, the key issue is not merely that funds crossed borders; it is that the alleged downstream uses differed substantially from the venture purpose communicated to investors. ICO materials said proceeds would support technology development, community growth, sales and marketing, support, and ordinary business functions for the decentralized Crowd Computer ecosystem. The regulator alleged that, during the offering, at least $5.8 million was transferred to foreign gold-mining companies, mainly in South Africa, through purported loans or equity investments. It further alleged that almost none of those funds had been recovered and that the mining interests generated no revenue. Separately, the complaint identifies at least 30 transfers totaling at least $5 million to Metavine Pty. Ltd. The alleged commingling of corporate accounts and repeated affiliate transfers could impede a clean source-and-use-of-funds audit. However, the case record does not establish that the transfers were laundering transactions. It supports a conclusion of alleged investor-fund diversion and inadequate disclosure in a U.S. token offering.

 

The SEC filed a civil complaint on January 6, 2022, charging Crowd Machine, Metavine, and Craig Sproule with alleged violations of the antifraud and registration provisions of U.S. federal securities law. The SEC said that Sproule, Crowd Machine, and Metavine consented to judgments without admitting or denying the allegations. Those judgments permanently enjoined them from future violations of the relevant securities provisions and barred them from participating in future securities offerings, including offerings of digital-asset securities. Crowd Machine and Metavine were also required to permanently disable CMCT tokens under their control and seek delisting or removal of CMCT from digital-asset trading platforms. Sproule received a public-company officer-and-director bar and was ordered to pay a $195,047 civil penalty. The later amended final judgment, dated January 17, 2024, required Crowd Machine and Metavine jointly and severally to pay $19,676,401.27 in disgorgement and $3,358,147.75 in prejudgment interest, for a total disgorgement obligation of $23,034,549.02, subject to the stated treatment of amounts paid by Metavine Pty. Ltd. The court also imposed $600,000 civil penalties on each of Crowd Machine and Metavine. Metavine Pty. Ltd. was jointly and severally liable for up to $5 million of disgorgement. These are SEC civil remedies, not criminal sentencing for money laundering.

 

Crowd Machine, Inc.
Case Title / Operation Name:
Crowd Machine, Inc.
Country(s) Involved:
Australia, United States
Platform / Exchange Used:
N/A
Cryptocurrency Involved:

Crowd Machine Compute Token (CMCT); Bitcoin (BTC); Ether (ETH); U.S. dollars (fiat proceeds also received).

Volume Laundered (USD est.):
N/A
Wallet Addresses / TxIDs :
N/A
Method of Laundering:

N/A

Source of Funds:

ICO investor contributions in BTC, ETH, and U.S. dollars. The SEC alleged that the token offering was unregistered and that investors were misled about the intended use of proceeds. The alleged source of improperly obtained funds was therefore CMCT ICO proceeds, not darknet, ransomware, corruption, or other traditionally designated AML predicate conduct.

Associated Shell Companies:

N/A

PEPs or Individuals Involved:

Craig Derel Sproule — founder and controlling individual of Crowd Machine and Metavine; Australian citizen. No politically exposed person, government official, or state-linked participant was identified in the available SEC filings.

Law Enforcement / Regulatory Action:
The SEC filed a civil enforcement action in the Northern District of California on January 6, 2022, alleging securities fraud and unregistered offers and sales of CMCT tokens. The resolution included permanent injunctions, a bar on Sproule’s participation in future securities offerings, a public-company officer-and-director bar, CMCT disablement/delisting measures, and monetary remedies. The January 2024 amended judgment ordered $19.68 million in disgorgement plus $3.36 million in prejudgment interest against Crowd Machine and Metavine, as well as $600,000 civil penalties against each company.
Year of Occurrence:
2018 — alleged ICO activity and transfers. 2022 — SEC case publicly filed and announced.
Ongoing Case:
Closed
AML Network Risk Rating:
đź”´ High Risk
Quick Links:
Popular Pages:
Disclaimer & Legal:
Facebook-f Twitter Youtube Pinterest-p Instagram Tiktok
© 2025 AML Network. – All Rights Reserved.