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SEC Freezes Assets of Bogus ICO Run by Former State Senator

The Securities and Exchange Commission (SEC), in the United States, has placed an emergency freeze on the assets of an initial coin offer (ICO). This bilked investors of as high as $4.3million. It was perpetrated fraudulently by a former Washington State senator.

Robert Dunlap, Nicole Bowdler and former State Senator Dave Schmidt were charged by the SEC with arranging an ICO scheme called Meta 1 Coin that promised lucrative investment returns. They were also accused of misleading pool participants by claiming that the ICO would make a profit of 224,923 per cent in less than a calendar year.

From 2003 to his unsuccessful re-election campaign, Schmidt was a Washington state senator. He is no stranger to controversy. In 2011, he was accused of spending campaign funds on his personal use including mortgage payments, condominium fees, and related fees. He also paid for travel expenses to conferences that were not directly related to his campaign. Schmidt denied using campaign funds improperly, but was eventually fined $10,000.

In addition to the SEC charges, prosecutors also accused the ICO organizers with using elaborate tactics and making many false statements. They claimed that the Meta 1 Coin was backed $1 billion by an art collection and that it has hired specialists who can spot authentic artistic creations. Further, the scammers claimed that their token was backed by $2 Billion of gold and that an accounting firm was reviewing the gold assets.

Instead, they used the pool’s money to pay for personal expenses such as a $215,000 Ferrari and cash withdrawals. They also paid for hotel, casino, restaurant, and other personal items.

In a similar case, Steven Seagal was also fined

The defendants were able to remunerate investors for recruiting new participants. However, the SEC defines these entities as fledgling businesses with limited or no business operations and little prospect for profit.

The SEC determined that Meta 1 coin was also selling securities, without filing a registration and qualifying for a exemption.

Each defendant could be sentenced to up to 20 years imprisonment and a $1 million fine if convicted of wire fraud. Selling unregistered securities is subject to a maximum five-year term in prison and $250,000 fiscal penalty.

Meta 1 Coin’s case comes almost two months after action movie star Steven Seagal was penalized for illegally promoting cryptocurrencies and serving as brand ambassador for a controversial initial cryptocurrency offering (ICO), Bitcoiin2Gen, (B2G).


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