The New York State Attorney General in the US has launched a probe into a token offering run by SA entrepreneur and fraud accused Eran Eyal’s retail blockchain startup Shopin.
This was confirmed by Eyal earlier this month to members of Shopin’s channel on messaging service Telegram. He confirmed in a message to the channel’s members that the startup is in “discussion” with the Securities and Exchange Commission (SEC) and the attorney general (AG).
Eyal confirmed that he had handed the names and email addresses of those that took part in the token offering to the SEC and AG’s office when recently requested to do so.
“We handed over all the files to them and are co-operating with them,” he writes in a message to users on 4 June.
The New York State AG is probing a token offering run by SA entrepreneur and fraud accused Eran Eyal
It’s not certain whether the probe is aimed only at Shopin or is part of a wider ongoing investigation that the SEC and the AG’s office is carrying out on token offerings.
Ventureburn last Thursday (21 June) sought comment from the New York State Attorney General’s media office as well as from investigator Brian Metz, who users on Shopin’s Telegram channel named as the case’s investigator, but had not received a response by time of publication.
Charged over allegedly Springleap fraud
Eyal was charged on 24 August last year by the New York Attorney General with allegedly stealing $600,000 from investors by fraudulently soliciting investors to purchase convertible notes through false representations of his company, Springleap (see this story).
The former Springleap founder — who was last in court last Wednesday (19 June) to argue the case — claims he is innocent of the charges. He is due back in court in September only.
This month a number of those who took part in the $42.5-million ICO or token offering which Shopin concluded in April last year reported on Shopin’s Telegram channel that they had received an email from the office of the state’s attorney general.
One member produced the full the email they were sent:
The Office of the New York State Attorney General is investigating the sale of digital assets (ie “tokens”) during a Token Generation Event (“TGE”) in March and April 2018, and “presale” offerings of the same tokens in late 2017 and early 2018. You are receiving this message because you may have purchased tokens during the presales or in the TGE. If you believe this is the case, please contact me at firstname.lastname@example.org.
Investigator Brian Metz
Criminal Enforcement and Financial Crimes
Office of the New York State Attorney General
When one user asked which tokens where being investigated, they were told in an emailed response from the AG’s office, that the office is investing the ICO for “possible fraudulent activity”.
‘Our lawyers still investigating Shopin pilots’
In October last year Eyal’s former business partner Steven Gray declined to comment on whether or not it was he who carried out pilot projects with US retailers Bed Bath and Beyond (BB&B) and Zegna on behalf of Shopin.
This, after a spokesperson from Bed Bath and Beyond said the retailer had “no record” of having done business with either Eyal, his present company Shopin — or his past company Passo. At the time the spokesperson told Ventureburn it also had no record of having done business with Passo’s former CEO Gray (see this story).
Shopin confirmed at the time that the pilots were undertaken by Passo, “a pre-cursor to Shopin”. It is understood that Eyal transferred the assets and investors from Passo to Shopin, when the latter was formed last year.
Referring to the pilot projects, Eyal on 11 June told those on Shopin’s Telegram channel that due diligence was “clearly done by a VC and an investment bank/broker dealer” and added that “they testified that they spoke with the pilots and confirmed contracts”.
Said Eyal to the channel’s users: “Our lawyers are trying to find out from BB&B why there is an inconsistency and if perhaps they did not keep accurate records for a long period of time”.
Former Shopin co-CEO parts ways
Meanwhile Eyal confirmed on Shopin’s Telegram channel last Thursday (21 June) that former co-CEO Jennifer Haggerty had “parted ways in early April” with the startup.
He added in the same message that his startup “is stronger than it has ever been before, with more proprietary technology, patterns and a clear go to market strategy”.
In August last year Shopin said that in response to Eyal’s arrest and his charges over the alleged Springleap fraud, the startup announced that it had formed a special committee, hired outside counsel and had appointed Haggerty as interim CEO (see this story). On his release from jail the following month, Eyal was made co-CEO alongside Haggerty.
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*Correction: In the initial version the headline referred to the “New York Auditor General” rather than “New York Attorney General”. We regret the error.
Featured image: Former Springleap founder Eran Eyal (Facebook)