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SEC Obtains Asset Freeze Against Former State Senator's Crypto Company

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The U.S. Securities and Exchange Commission (SEC) has obtained an asset freeze and other emergency relief against Meta 1 Coin Trust for an ongoing securities fraud perpetrated by a former state senator and two others who defrauded investors in and outside the U.S.

The defendants raised more than $4.3 million from more than 150 investors.

The SEC's complaint filed in the Western District of Texas (Austin Division) on March 16, 2020, charged the Meta 1 Coin Trust, former Washington state Republican senator David Schmidt and two Florida residents, Robert Dunlap and Nicole Bowdler, with violating antifraud and securities registration provisions of the federal securities laws.

The defendants allegedly marketed and sold a purported digital asset called the "Meta 1 Coin" in an unregistered securities offering conducted through the Meta 1 Coin Trust.

The defendants made numerous false and misleading statements to potential and actual investors, including the claim that the Meta 1 Coin was risk-free, would never lose value and could return up to 224,923%, the complaint said.

It was also claimed that the Meta 1 Coin was backed by a $1 billion art collection or $2 billion of gold, and that an accounting firm was auditing the gold assets.

The complaint alleges that 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 Shamoun.

They also used some of the investor funds to buy luxury automobiles, including a $215,000 Ferrari.

The SEC seeks permanent and conduct-based injunctions, disgorgement of allegedly ill-gotten gains with prejudgment interest, and civil penalties against the defendants.

It also charges Pramana and Shamoun as relief defendants and seeks disgorgement of allegedly ill-gotten gains with prejudgment interest.

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