The US Securities and Exchange Commission (SEC) recently secured an asset freeze order and other emergency relief orders against Meta 1 Coin, a cryptocurrency project promoted by a state senator.
Securities fraud stopped
Meta 1 Coin was unregistered security offered perpetrated by Robert Dunlap and Nicole Bowdler, two Florida residents. Former Washington state senator David Schmidt was also connected with the offering. According to the SEC complaint, the defendants sold and marketed the Meta 1 Coin digital asset via the Meta 1 Coin Trust and conducted unregistered security offering for the same.
The regulator suggests that the defendants several misleading and false statements related to the offering to their actual and potential investors. They said that the Meta 1 Coin was backed by $2 billion of gold or $1 billion of the art collection. They said that an accounting firm was taking care of the audits of the gold assets backing the coin.
They also told investors that Meta 1 Coin was a risk-free investment and would never lose its value. The defendants also claimed that the returns of the assets could be as high as 224,923%. The investors never received their coins. Their funds were used to pay for the personal expenses of the defendants and to provide funds to Peter K. Shamoun and Pramana Capital Inc.
A $4.3 million securities fraud
The SEC complaint suggests that over 150 investors, both domestic and international, pooled in $4.3 million. The complaint was filed on March 16 in the Western District of Texas (Austin Division). It was unsealed on Mach 20. The SEC has charged Meta 1 Coin Trust, senator Schmidt, Bowdler and Dunlap with violations of securities registration laws and antifraud provisions of the federal securities laws.
It also marks Shamoun and Pramana as relief defendants in the case. The SEC is looking for conduct-based and permanent injunctions against the primary defendants alongside civil penalties. It also seeks disgorgement of ill-gotten gains alongside prejudgment interest from all defendants.