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SEC Files Charges Against ex-Senator David Schmidt – Meta 1 Coin

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Meta 1 Coin - David Shmidt

This week, the Securities and Exchange Commission (SEC) continued its ICO crackdown campaign. This time regulators announced charges against former Republican Washington state senator David Schmidt and two other individuals for their roles in the 2018 Meta 1 Coin scam. It is alleged that the  ICO left investors out of millions. Now the SEC seeks retribution for those who lost.

The SEC filed its complaint in the Western District of Texas on March 16. Regulators also named two other people, Robert Dunlap and Nicole Bowdler in the scam. All individuals face charges for violating antifraud and securities regulations.

Discussing the charges, David Peavler, the SEC’s regional director at the Fort Worth Regional Office stated that these individuals went out of their way to fraud US investors. The regulator went as far as to state they made “audacious claims about the Meta 1 Coin.” He explained that the team said anything to promote the event that left thousands with losses. Lastly, Peavler took a moment to remind investors that they should always act skeptically towards promoters who claim that their investment can’t lose value, or that investors will receive huge returns for minimal participation.

False Statements

The 2018 Meta 1 Coin ICO appeared to be a great opportunity for investors at first. Unfortunately, the developers behind the Meta 1 project appear to have had other plans. The group made numerous false and misleading statements. For example, the group promised investors returns “as high as 224,923%”. On top of this outlandish claim, developers told investors the project was risk-free and “could never lose its value, and that one coin, which could be purchased for $22.22 (or $44.44), would be worth as much as $50,000 after the ICO”.

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David Shmidt - Meta 1 Coin

David Shmidt – Meta 1 Coin

If all of these promises weren’t enough to get you to participate, Meta 1 had other strategies to employ. For example, Meta 1 promoters claimed an art collection valued at $1 billion backing the tokens.  Dunlap was sued by the art collector who is the rightful owner to stop claiming ownership over the art.  The final judgment stated that Dunlap and Meta 1 do not have “any interest, right, or title to the artwork [which Meta 1 claimed it owned]” and awarded the art collector $25 million in damages for slandering the art collector’s title and interfering with prospective buyers of the art.

Also, the SEC pointed to instances when the group claimed deposits valued at $2 billion backing the tokens. Supposedly, a reputable accounting firm regularly audited these funds. It appears that none of this was true.

Meta 1 Coins ICO

The Meta ICO raised just over $4.3 million from around 150 investors from across the globe. Unfortunately for Meta 1, many of these investors were from the United States. As you would expect, complaints began to roll into the SEC last year after Meta 1 failed to distribute coins to investors.

SEC investigators revealed that Meta 1 spent the funds in question on personal items. Specifically, the proceeds were funneled to a Chicago-based fund, Pramana Capital. Additionally, an individual named Peter Shamoon received some of the ill-gotten funds. Regulators described how the fraudsters spent the funds on their lavish lifestyles. In one instance, in particular, one of the individuals purchased a $215,000 Ferrari.

Now the SEC is seeking civil penalties and permanent injunctions against Schmidt and the other two defendants. As part of the punishment, the SEC wants Meta 1 to cease-and-desist operations. Additionally, the company must refund all ICO investors. This refund includes any funds sent to Pramana Capital and Shamoon.

Do Your Research

This story is another case of uninformed investors caught in the blockchain hype. Hopefully, the SEC is able to reunite these investors with their lost funds. For now, Shmidt and his companions face an uphill battle against the SEC in the coming months.

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David Hamilton is a full-time journalist and a long-time bitcoinist. He specializes in writing articles on the blockchain. His articles have been published in multiple bitcoin publications including Bitcoinlightning.com

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