The United States Securities and Substitution Commission (SEC) has charged Eran Eyal, the founder Shopin, with orchestrating a fraudulent initial coin offering (ICO).

In a press release on Dec. 11, the SEC alleged that the businessman and his company defrauded hundreds of investors in an ICO that raised more than than $42 million from August 2022 to Apr 2022. According to the SEC, Shopin'south actions constituted an unregistered securities offering of Shopin Tokens.

Eyal told investors he would use the funds from the token sale to create blockchain-based shopper profiles. These profiles would so track customer buy histories across online retailers and recommend products based on this information. However, Eyal never created a functional platform. Marc P. Berger, Manager of the SEC's New York Regional Function said:

"As alleged in today's action, the SEC seeks to concord 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 [...] Retail investors because an investment in a digital nugget that meets the definition of a security must be afforded the same true disclosures as in any traditional securities offering."

Furthermore, Eyal allegedly lied virtually having forged partnerships with established retail outlets when in fact no such partnerships existed.

The SEC too claims that Eyal misappropriated investor funds to pay for personal expenses. From the SEC complaint:

"Eyal used over $500,000 of investor funds for expenses such as his rent, retail shopping, entertainment, tickets to philanthropic events, and a dating service, but omitted to disembalm to investors that he would employ any proceeds for his ain do good."

The commission has charged Eyal and Shopin with violating the anti-fraud and registration provisions of the federal securities laws, and is seeking injunctive relief, disgorgement with prejudgment interest and civil money penalties. The SEC also seeks a bar confronting Eyal and Shopin prohibiting them from participating in any time to come securitized token offerings.

Eyal had previously been charged with defrauding investors for $600,000 past misrepresenting the staff and clients of his previous startup, Springleap.