The Securities and Exchange Commission (SEC) has named Eran Eyal, founder of the Shopin blockchain project, as the central figure in a multi-million dollar unregistered securities fraud case.
Shopin, which was designed to create universal shopper profiles and track customer purchases through blockchain, raised more than $42 million during its ICO, with contributions from hundreds of US investors.
The SEC has accused Eyal of misappropriating investor funds, including dipping into Shopin’s assets for personal use. Eyal allegedly used investor funds to splash out on shopping, entertainment, rent, and even a personal dating service.
The SEC claims that Eyal siphoned off at least $500,000 for the lavish personal expenses.
Despite a hugely successful ICO funding round, the SEC claims that Shopin never created a functional platform, and it’s unclear where investors funds are now held, or indeed if any still remain.
The original complaint was filed in the Manhattan Federal District Court and brought charges against both Eyal and the rest of Shopin’s leadership for violating anti-fraud and securities registration requirements.
Apparently, Eyal and Shopin also falsified business relationships to mislead investors.
The Shopin website appears to show product testimonials from the VP of department store giant Macy’s, and also lists fashion design company Michael Kors, department store Kohl’s, and sock manufacturer Renfro as requesting follow-up meetings with the Shopin team.
At this point, it’s unclear how many of these relationships, if any, were genuine.
Marc Berger, Director of the SEC for New York, shared: “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”
Shopin’s website is still active. However, Eyal is no longer listed on the Shopin team or advisers.
Instead, Eyal’s team URL, which still exists, simply shows a ‘404 Page not Found’ error message.
No statement has been issued on Shopin’s Twitter or blog.
Eyal has deleted his Twitter account, and provided no official response to the charges. It is believed he has already been barred from operating as an officer or director of any US company for life.