A former Washington state senator has been caught up in a scam ICO that last week saw its funds frozen by the Securities and Exchange Commission (SEC). David Schmidt was hired by Meta 1 Coin founders Robert Dunlap and Nicole Bowdler to market the project, which the SEC now accuses of making “numerous false and misleading statements” and spending the ICO money on luxury items.
“Risk Free” Investment
Meta 1, which marketed itself as a “coin for humanity” and a “sophisticated financial instrument”, claimed to be an art verification platform where art would be purchased, verified for authenticity, tokenized, and then sold.
The SEC complaint states that Meta 1 made claims that even the boldest scammer would blush at, such as that the Meta 1 Coin was “backed by a $1 billion art collection or $2 billion of gold” and that “Meta 1 Coin was risk-free, would never lose value and could return up to 224,923%.”
$4.3 Million ICO Raise
Somehow the Meta 1 ICO managed to raise over $4.3 million, helped no doubt by Schmidt’s involvement, which the team then spent on themselves, failing to distribute any tokens:
…the defendants never distributed the Meta 1 Coins and instead used investor funds to pay personal expenses and funnel proceeds to two others, Pramana Capital Inc. and Peter K. Shamoun. The complaint alleges that some of the investor funds were used to buy luxury automobiles, including a $215,000 Ferrari.
“Audacious” Scam Attempt
The SEC calls the claims made by Meta 1 “audacious” and has charged the Meta 1 Coin Trust, Dunlap, Bowdler, and Schmidt with “violating antifraud and securities registration provisions of the federal securities laws”.
The SEC has managed to freeze what assets remain, but investors will likely only get a fraction of their investments back, if anything at all. This case is a sad reminder that there are still people out there who prey on others’ lack of knowledge and understanding of blockchain and cryptocurrencies, although given their ludicrous claims and blatantly shady practices, Meta 1 has to go down as one of the worst attempts at a scam that the crypto space has ever seen.