Eran Eyal, founder and former CEO of Shopin, has been convicted of orchestrating a fraudulent ICO after pleading guilty to charges in New York.

Yesterday we reported that the United States Securities and Exchanges Commission (SEC) had charged Eran Eyal, founder and former CEO of Shopin, with running a fraudulent $42m initial coin offering (read more). Today he stands convicted.

Eyal also pleaded guilty to, and was convicted of, two counts of Scheme to Defraud in the First Degree, a Class E felony, related to his two previous companies; Springleap, Inc, and Pass Sync, Inc.

New York Attorney General (NYAG) Letitia James announced the conviction after Eyal pleaded guilty to the felony charges. Regarding the case, James said:

“My office won’t allow white collar criminals to get away with their schemes to defraud innocent victims, no matter how complex.

“This one individual created company after company after company just to continue cheating investors out of hundreds of thousands of dollars. Using fake product trials and nonexistent contracts with major retailers he was able to lure victims to invest in his technology schemes, including his very own cryptocurrency. We will use every available resource at our disposal to pursue all who attempt to abuse and manipulate the system, because no one is above the law.”

Despite the serious nature of his offences, and the determined words of the New York Attorney General, it looks like Eyal has escaped jail time. Instead, he has been ordered to pay $125,000 in restitution and $475,000 in judgments to investors. He must also surrender the $450,000 worth of crypto remaining to the NYAG’s office.

Unsurprisingly, Eyal has also been forced to step-down as CEO of Shopin and is prohibited from raising capital or serving as a business officer in the state of New York for three years.

AYO.NEWS says:

Well, that was quick! Given the scale of Eyal’s crimes, and his track record, it is perhaps surprising that he’s not looking at a serious jail sentence. Despite his three-year ban in New York, something tells us we’ll be seeing Eyal back in business, somewhere, sometime real soon…

AYO.NEWS says features the opinion of the author and does not necessarily reflect the views of Pentagon Digital Limited.

Shopin founder Eran Eyal has been charged with orchestrating a fraudulent initial coin offering (ICO) by the United States Securities and Exchange Commission (SEC).

In an official statement released yesterday (11^th Dec.), the SEC confirmed they had charged the digital asset entrepreneur and his company with defrauding hundreds of investors of more than $42 million.

The SEC alleges that from August 2017 unto April 2018, Eyal conducted an unregistered securities offering by selling Shopin Tokens in an ICO. The company claimed it would use the funds to create universal shopper profiles, based on blockchain technology, to track customer purchase histories across online retailers, using the information to make product recommendations.

However, the SEC says that Shopin never created a functional platform and misrepresented purported partnerships with well-known retailers and the involvement of a prominent digital-asset space entrepreneur.

Furthermore, the SEC says that Eyal misappropriated investor funds for his personal use, spending at least $500,000 on rent, shopping, entertainment and a dating service.

Commenting on the case, Director of the SEC’s New York Regional Office, Marc P. Berger, explained:

“As alleged in today’s action, the SEC seeks to hold Eyal and Shopin responsible for scamming innocent investors with false claims about relationships and contracts they had secured in support of a blockchain-based universal shopper profile.

“Retail investors considering an investment in a digital asset that meets the definition of a security must be afforded the same truthful disclosures as in any traditional securities offering.”

Specifically, the complaint, filed by the SEC with the Manhattan federal district court, charges Eyal and Shopin with “violating the antifraud and registration provisions of the federal securities laws, and seeks permanent injunctions, disgorgement with interest, and civil penalties, in addition to an officer-and-director bat against Eyal and a bar against Eyal and shopin prohibiting them from participating in any future offering of digital-asset securities.”

Its not the first time Eyal has been in hot water with US authorities, having been previously charged with misrepresenting the staff and clients of his previous startup, Springleap.

AYO.NEWS says:

If the allegations are proven true, it really does make the mind boggle how someone with Eyal’s experience could expect to get away with such misrepresentations and spending half-a-million dollars of investors’ money on things like dating services!

Whatever happens, we think there’s a good movie plot here!

AYO.NEWS says features the opinion of the author and does not necessarily reflect the views of Pentagon Digital Limited.

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The Norwegian gambling law is ambiguous and leaves plenty of room for uncertainty.

As is the case in many countries, gambling is overseen by a government run monopoly, where Norsk Tipping and Norsk Rikstoto are the two main companies permitted to take wagers from Norwegian players.

Although that doesn’t stop Norwegians gambling on internationally licensed sites, far from it in fact. Despite the government’s attempt to block transactions and IPs of unlicensed casinos there are still several online casinos to choose from for any potential Norwegian player.

In reality it simply represents a mass of funds that aren’t collected as tax in Norway, but instead leave the country’s borders, lining the pockets of international operators.

Winner and losers

At present it’s the players that are the losers in this situation. Norwegians play on international gambling sites and the authorities are actually working against them as they seek to block transactions, causing more harm rather than protecting the players.

Responsible gambling shouldn’t be taken light heartedly, and a regulated market could solve many of the existing issues in that particular area. With clear laws in place for anyone offering their services in Norway, as in their neighbouring countries, player protection would be made easier to oversee.

The larger international gambling operators are already engaged in several markets where this is a reality, and have proven time and again their ability to adapt their services to alternative markets. There stands no reason why Norway would be any different.

On the other hand, from a social welfare perspective it’s easy to see how the existing monopoly might be the best option if the government manages to ensure unregulated operators remain a non-viable option. Something they have failed at so far.

Room for both

We have however seen some compromises in other countries, allowing room for both state owned and private businesses to operate concurrently. For Norway though, the most logical point of departure is to look toward their neighbours, Sweden and Denmark, to get a feel of how this could possibly pan out.

Denmark regulated their market back in 2012 and Sweden followed suit in 2019. So far, this has shown that both private and state run gambling companies can exist in harmony. In Sweden for example, between January and October 2019, close to $300 million was paid in taxes on gambling. It’s safe to say then that there are many benefits to deregulating the market to allow room for operators outside if a country monopoly.

What can be done?

It’s no secret that we, as humans, are moving towards a more digitalised world. It’s probable that the gaming monopolies’ offline revenues are increasingly likely to decrease year on year.

With online competition becoming increasingly tougher it’s fair to say that international operators are likely to take a large portion of money wagered online against state run monopoly enterprises.

If the Norwegian government does seek to regulate the gambling market and allow other players to enter the field Norwegian authorities could be set to reap millions in tax revenue.

It’s no surprise that betting and casino companies want to see an overhaul of the current , seeking to be a benefit to Norwegian players and lead to an increase in tax income for the state.

Finnplay, the Nordic iGaming platform provider and gaming group, has been granted an Online Casino licence by the Danish Gambling Authority (Spillemyndigheden).

The news follows last month’s acquisition of a Malta Gaming Authority Type 2 license (read more) and an extension to its Swedish licence in October.

Commenting on the news Chief Executive Officer of the Finnplay Group, Martin Prantner, said:

“This new Danish licence presents a great opportunity for Finnplay and our operating partners. Our strong record of compliance in regulated markets and the Nordics will help ensure a smooth and successful entry to the Danish market.”

Just last week AYO.NEWS reported that business is set to get a whole lot more expensive for Danish operators, thanks to an eight percentage point tax increase included in the 2020 Finance Act (read more).

Cryptocurrency users in Denmark have been getting nasty surprises in their letterboxes, in the form of demands from Skattestyrelsen (Skat) – the Danish tax agency.

According to reports, the letters are demanding information regarding profits and losses for the fiscal years 2016 to 2018. In common with the United States’ IRS (read more), Skat is asking users to provide information based on FIFO (first in, first out) accounting principles.

The agency is apparently asking for a litany of information, including the rates used for each transaction, the purposes for acquiring digital currencies, and documentation detailing the setting up of cryptocurrency wallets. It also wants crypto users to provide screenshots proving their trading activity on crypt exchanges, and bank account statements from the periods covered.

Skat’s latest move follows its late 2018 decision to pursue almost 3,000 individuals it claimed owed tax on Bitcoin (BTC) gains, and the decision by the Danish Tax Council giving it permission to demand information about all trades on three Danish cryptocurrency exchanges.

AYO.NEWS says:

It was inevitable that at some point that tax man would come knocking about cryptocurrencies in many countries. However, as the IRS is finding out in the United States, due to the nature of how people trade and store cryptocurrencies and digital assets, often moving them frequently, and their highly volatile nature, providing the documentary proof required can prove nightmarish if not impossible for many. Its also likely that investigating crypto cases will tie up an awful lot of resources for tax departments.

Personally, we think the Portuguese have the best strategy, imposing absolutely no tax on crypto trades, payments or earnings (read more).

AYO.NEWS says features the opinion of the author and does not necessarily reflect the views of Pentagon Digital Limited.

Major online casino Videoslots.com has been granted a full five-year license by the Swedish Gaming Authority, following an appeal against its original limited two-year license.

Spelinspektionen originally awarded the operator a limited two-year license in December 2018, but the operator appealed the decision, arguing there was no valid reason it shouldn’t have been awarded the full five-year license.

The decision will be a major boost for the operator, which is also licensed in Denmark, Italy, Malta, Spain and the United Kingdom, allowing it to plan its expansion in the important Swedish market with more confidence.

Commenting on the news CEO at Videoslots.com, Alexander Stevendahl, said:

“Videoslots is firmly committed to keeping gambling both safe and fun and this has been recognised with the full five-year period of our Swedish licence.

“Player safety across all our markets is always our priority and this news is very welcome due to the growth we are seeing in the Swedish market’’

Staying with Videoslots.com, just last week AYO.NEWS reported the operator had entered a partnership with New York-based independent casino games provider High 5 Games (read more).

AYO.NEWS says:

This upheld appeal will be taken by many as yet more confirmation that Spelinspektionen made a series of very poor decisions in the first year of the re-regulated Swedish online gambling market – needlessly giving operators a hard time. No doubt it will encourage other operators who feel frustrated at the regulators’ previous decisions too.

AYO.NEWS says features the opinion of the author and does not necessarily reflect the views of Pentagon Digital Limited.