U.S. Securities and Exchange Commission v. Crowd Machine, Inc. et al
Filing
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JUDGMENT Pursuant to #5 Stipulation. Signed by Judge Haywood S. Gilliam, Jr. on 1/11/2022. ***Civil Case Terminated.***(ndr, COURT STAFF) (Filed on 1/11/2022)
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Adam B. Gottlieb (NY Bar. No. 4399135)
gottlieba@sec.gov
(202) 551-8299
Attorney for Plaintiff
U.S. SECURITIES AND EXCHANGE COMMISSION
100 F Street, NE
Washington, DC 20549
Facsimile: (301) 847-4705
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UNITED STATES DISTRICT COURT
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NORTHERN DISTRICT OF CALIFORNIA
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OAKLAND DIVISION
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U.S. SECURITIES AND EXCHANGE
COMMISSION,
Plaintiff,
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v.
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FINAL JUDGMENT AS TO
CRAIG SPROULE
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CROWD MACHINE, INC., METAVINE, INC.,
AND CRAIG SPROULE,
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Defendants,
and
METAVINE PTY. LTD.,
Relief Defendant.
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CASE NO. 4:22-cv-00076-HSG
.
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The Securities and Exchange Commission having filed a Complaint and Defendant Craig
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Sproule (“Defendant”) having entered a general appearance; consented to the Court’s jurisdiction
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over Defendant and the subject matter of this action; consented to entry of this Final Judgment
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without admitting or denying the allegations of the Complaint (except as to jurisdiction and
SEC v. Crowd Machine, Inc., et al.
Final Judgment as to Craig Sproule
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except as otherwise provided herein in paragraph IX); waived findings of fact and conclusions of
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law; and waived any right to appeal from this Final Judgment:
I.
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IT IS HEREBY ORDERED, ADJUDGED, AND DECREED that Defendant is
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permanently restrained and enjoined from violating, directly or indirectly, Section 10(b) of the
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Securities Exchange Act of 1934 (“Exchange Act”), 15 U.S.C. § 78j(b), and Rule 10b-5
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thereunder, 17 C.F.R. § 240.10b-5, by using any means or instrumentality of interstate
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commerce, or of the mails, or of any facility of any national securities exchange, in connection
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with the purchase or sale of any security:
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(a) to employ any device, scheme, or artifice to defraud;
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(b) to make any untrue statement of a material fact or to omit to state a material fact
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necessary in order to make the statements made, in the light of the circumstances
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under which they were made, not misleading; or
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(c) to engage in any act, practice, or course of business which operates or would operate
as a fraud or deceit upon any person.
IT IS FURTHER ORDERED, ADJUDGED, AND DECREED that, as provided in
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Federal Rule of Civil Procedure 65(d)(2), the foregoing paragraph also binds the following who
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receive actual notice of this Final Judgment by personal service or otherwise: (a) Defendant’s
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officers, agents, servants, employees, and attorneys; and (b) other persons in active concert or
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participation with Defendant or with anyone described in (a)
II.
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IT IS HEREBY FURTHER ORDERED, ADJUDGED, AND DECREED that Defendant
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is permanently restrained and enjoined from violating Section 17(a) of the Securities Act of 1933
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(“Securities Act”) [15 U.S.C. § 77q(a)] in the offer or sale of any security by the use of any
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means or instruments of transportation or communication in interstate commerce or by use of the
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mails, directly or indirectly:
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(a) to employ any device, scheme, or artifice to defraud;
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SEC v. Crowd Machine, Inc., et al.
Final Judgment as to Craig Sproule
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(b) to obtain money or property by means of any untrue statement of a material fact or
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any omission of a material fact necessary in order to make the statements made, in
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light of the circumstances under which they were made, not misleading; or
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(c) to engage in any transaction, practice, or course of business which operates or would
operate as a fraud or deceit upon the purchaser.
IT IS FURTHER ORDERED, ADJUDGED, AND DECREED that, as provided in
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Federal Rule of Civil Procedure 65(d)(2), the foregoing paragraph also binds the following who
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receive actual notice of this Final Judgment by personal service or otherwise: (a) Defendant’s
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officers, agents, servants, employees, and attorneys; and (b) other persons in active concert or
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participation with Defendant or with anyone described in (a).
III.
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IT IS HEREBY FURTHER ORDERED, ADJUDGED, AND DECREED that Defendant
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is permanently restrained and enjoined from violating Section 5 of the Securities Act [15 U.S.C.
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§ 77e] by, directly or indirectly, in the absence of any applicable exemption:
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(a) Unless a registration statement is in effect as to a security, making use of any means
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or instruments of transportation or communication in interstate commerce or of the
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mails to sell such security through the use or medium of any prospectus or otherwise;
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(b) Unless a registration statement is in effect as to a security, carrying or causing to be
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carried through the mails or in interstate commerce, by any means or instruments of
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transportation, any such security for the purpose of sale or for delivery after sale; or
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(c) Making use of any means or instruments of transportation or communication in
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interstate commerce or of the mails to offer to sell or offer to buy through the use or
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medium of any prospectus or otherwise any security, unless a registration statement
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has been filed with the Commission as to such security, or while the registration
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statement is the subject of a refusal order or stop order or (prior to the effective date
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of the registration statement) any public proceeding or examination under Section 8
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of the Securities Act [15 U.S.C. § 77h].
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SEC v. Crowd Machine, Inc., et al.
Final Judgment as to Craig Sproule
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IT IS FURTHER ORDERED, ADJUDGED, AND DECREED that, as provided in
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Federal Rule of Civil Procedure 65(d)(2), the foregoing paragraph also binds the following who
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receive actual notice of this Final Judgment by personal service or otherwise: (a) Defendant’s
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officers, agents, servants, employees, and attorneys; and (b) other persons in active concert or
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participation with Defendant or with anyone described in (a).
IV.
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IT IS FURTHER ORDERED, ADJUDGED, AND DECREED that pursuant to Section
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21(d)(5) of the Exchange Act [15 U.S.C. § 78u(d)(5)], Defendant is permanently restrained and
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enjoined from participating, directly or indirectly, including, but not limited to, through any
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entity controlled by him, in any offering of securities, including any digital asset security;
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provided, however, that such injunction shall not prevent Defendant from purchasing or selling
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securities, including digital asset securities, for his own personal account.
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IT IS FURTHER ORDERED, ADJUDGED, AND DECREED that, as provided in
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Federal Rule of Civil Procedure 65(d)(2), the foregoing paragraph also binds the following who
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receive actual notice of this Final Judgment by personal service or otherwise: (a) Defendant’s
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officers, agents, servants, employees, and attorneys; and (b) other persons in active concert or
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participation with Defendant or with anyone described in (a)
V.
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IT IS FURTHER ORDERED, ADJUDGED, AND DECREED that, pursuant to Section
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21(d)(2) of the Exchange Act [15 U.S.C. § 78u(d)(2)] and Section 20(e) of the Securities Act [15
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U.S.C. § 77t(e)]], Defendant is prohibited from acting as an officer or director of any issuer that
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has a class of securities registered pursuant to Section 12 of the Exchange Act [15 U.S.C. § 78l]
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or that is required to file reports pursuant to Section 15(d) of the Exchange Act [15 U.S.C.
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§ 78o(d)]
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VI.
IT IS FURTHER ORDERED, ADJUDGED, AND DECREED that Defendant shall pay a
civil penalty in the amount of $195,047 to the Securities and Exchange Commission pursuant to
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SEC v. Crowd Machine, Inc., et al.
Final Judgment as to Craig Sproule
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Section 20(d) of the Securities Act [15 U.S.C. § 77t(d)], and Section 21(d)(3) of the Exchange
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Act [15 U.S.C. § 78u(d)(3)]. Defendant shall satisfy this obligation by paying $195,047 to the
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Securities and Exchange Commission pursuant to the terms of the payment schedule set forth in
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paragraph VII below after entry of this Final Judgment.
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Defendant may transmit payment electronically to the Commission, which will provide
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detailed ACH transfer/Fedwire instructions upon request. Payment may also be made directly
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from a bank account via Pay.gov through the SEC website at
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http://www.sec.gov/about/offices/ofm.htm. Defendant may also pay by certified check, bank
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cashier’s check, or United States postal money order payable to the Securities and Exchange
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Commission, which shall be delivered or mailed to:
Enterprise Services Center
Accounts Receivable Branch
6500th MacArthur Boulevard
Oklahoma City, OK 73169
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and shall be accompanied by a letter identifying the case title, civil action number, and name of
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this Court; Craig Sproule as a Defendant in this action; and specifying that payment is made
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pursuant to this Final Judgment.
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Defendant shall simultaneously transmit photocopies of evidence of payment and case
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identifying information to the Commission’s counsel in this action. By making this payment,
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Defendant relinquishes all legal and equitable right, title, and interest in such funds and no part
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of the funds shall be returned to Defendant.
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The Commission may enforce the Court’s judgment for penalties by the use of all
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collection procedures authorized by law, including the Federal Debt Collection Procedures Act,
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28 U.S.C. § 3001 et seq., and moving for civil contempt for the violation of any Court orders
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issued in this action. Defendant shall pay post-judgment interest on any amounts due after 30
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days of the entry of this Final Judgment pursuant to 28 U.S.C. § 1961. The Commission shall
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hold the funds, together with any interest and income earned thereon (collectively, the “Fund”),
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pending further order of the Court.
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SEC v. Crowd Machine, Inc., et al.
Final Judgment as to Craig Sproule
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The Commission may propose a plan to distribute the Fund subject to the Court’s
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approval. Such a plan may provide that the Fund shall be distributed pursuant to the Fair Fund
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provisions of Section 308(a) of the Sarbanes-Oxley Act of 2002. The Court shall retain
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jurisdiction over the administration of any distribution of the Fund and the Fund may only be
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disbursed pursuant to an Order of the Court.
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Regardless of whether any such Fair Fund distribution is made, amounts ordered to be
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paid as civil penalties pursuant to this Final Judgment shall be treated as penalties paid to the
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government for all purposes, including all tax purposes. To preserve the deterrent effect of the
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civil penalty, Defendant shall not, after offset or reduction of any award of compensatory
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damages in any Related Investor Action based on Defendant’s payment of disgorgement in this
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action, argue that he is entitled to, nor shall he further benefit by, offset or reduction of such
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compensatory damages award by the amount of any part of Defendant’s payment of a civil
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penalty in this action (“Penalty Offset”). If the court in any Related Investor Action grants such
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a Penalty Offset, Defendant shall, within 30 days after entry of a final order granting the Penalty
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Offset, notify the Commission’s counsel in this action and pay the amount of the Penalty Offset
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to the United States Treasury or to a Fair Fund, as the Commission directs. Such a payment shall
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not be deemed an additional civil penalty and shall not be deemed to change the amount of the
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civil penalty imposed in this Final Judgment. For purposes of this paragraph, a “Related Investor
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Action” means a private damages action brought against Defendant by or on behalf of one or
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more investors based on substantially the same facts as alleged in the Complaint in this action.
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VII.
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Defendant shall pay the penalty due of $195,047 in five (5) installments to the
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Commission according to the following schedule: (1) $100,000 within 30 days of entry of this
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Final Judgment; (2) $23,761.75 within 90 days of entry of this Final Judgment; (3) $23,761.75
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within 180 days of entry of this Final Judgment; (4) $23,761.75 within 270 days of entry of this
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Final Judgment; (5) and $23,761.75 within 360 days of entry of this Final Judgment. Payments
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shall be deemed made on the date they are received by the Commission and shall be applied first
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SEC v. Crowd Machine, Inc., et al.
Final Judgment as to Craig Sproule
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to post-judgment interest, which accrues pursuant to 28 U.S.C. § 1961 on any unpaid amounts
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due after 30 days of the entry of Final Judgment. Prior to making the final payment set forth
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herein, Defendant shall contact the staff of the Commission for the amount due for the final
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payment.
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If Defendant fails to make any payment by the date agreed and/or in the amount agreed
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according to the schedule set forth above, all outstanding payments under this Final Judgment,
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including post-judgment interest, minus any payments made, shall become due and payable
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immediately at the discretion of the staff of the Commission without further application to the
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Court.
VIII.
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IT IS FURTHER ORDERED, ADJUDGED, AND DECREED that Defendant’s Consent
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is incorporated herein with the same force and effect as if fully set forth herein, and that
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Defendant shall comply with all of the undertakings and agreements set forth therein, including,
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but not limited to, the undertakings to:
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(a) Cooperate with and not object to Crowd Machine, Inc., and Metavine, Inc.
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permanently disabling any Crowd Machine Compute Tokens (CMCT) owned or
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beneficially owned by him or held in his name; and
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(b) Certify, in writing, compliance with the undertakings set forth above. The
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certification shall identify the undertakings, provide written evidence of compliance
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in the form of a narrative, and be supported by exhibits sufficient to demonstrate
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compliance. The Commission staff may make reasonable requests for further
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evidence of compliance, and Defendant agrees to provide such evidence. Defendant
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shall submit the certification and supporting material to Paul Kim, Assistant Director,
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Division of Enforcement, with a copy to the Office of Chief Counsel of the Division
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of Enforcement, no later than sixty (60) days from the date of the completion of the
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undertakings.
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SEC v. Crowd Machine, Inc., et al.
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IX.
IT IS FURTHER ORDERED, ADJUDGED, AND DECREED that, solely for purposes
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of exceptions to discharge set forth in Section 523 of the Bankruptcy Code, 11 U.S.C. § 523, the
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allegations in the Complaint are true and admitted by Defendant, and further, any debt for
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disgorgement, prejudgment interest, civil penalty or other amounts due by Defendant under this
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Final Judgment or any other judgment, order, consent order, decree or settlement agreement
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entered in connection with this proceeding, is a debt for the violation by Defendant of the federal
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securities laws or any regulation or order issued under such laws, as set forth in Section
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523(a)(19) of the Bankruptcy Code, 11 U.S.C. § 523(a)(19).
X.
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IT IS FURTHER ORDERED, ADJUDGED, AND DECREED that this Court shall retain
jurisdiction of this matter for the purposes of enforcing the terms of this Final Judgment.
XI.
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There being no just reason for delay, pursuant to Rule 54(b) of the Federal Rules of Civil
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Procedure, the Clerk is ordered to enter this Final Judgment forthwith and without further notice.
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1/11/2022
Dated: _________________________
_________________________________
UNITED STATES DISTRICT JUDGE
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SEC v. Crowd Machine, Inc., et al.
Final Judgment as to Craig Sproule
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