The Securities and Exchange Commission (SEC) today charged Shopin CEO Eran Eyal and his firm with “defrauding investors” in connection with a 2017 ICO that allegedly raised $42 million.

Eyal allegedly hosted the ICO between August 2017 and April 2018 without properly registering the token sale with the SEC. According to the complaint, the company sold Shopin Tokens to create blockchain-based universal consumer profiles designed to track users’ shopping histories. Products of interest would also be advertised to these users based on their previous purchases.

But, according to the SEC, the company never created any such platform. 

Instead, funds garnered through the $42 million token sale were utilized by Eyal for personal expenses, such as rent, entertainment and even a dating service. The SEC also accused Eyal of lying to investors about Shopin’s supposed partnerships with retailers and a “well-known entrepreneur” in the blockchain industry as a way of making the company appear more prominent.

Marc P. Berger—director of the SEC’s regional office in New York—explained in a statement, “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.”

The last two years have seen the SEC cracking down hard on unregistered coin offerings. Recent examples include the SEC’s lawsuit against Telegram, which the Commission claims raised $1.7 billion in an unregistered ICO. The SEC filed an emergency action against Telegram last October and sought to block the company from moving forward with its plans to distribute GRAM tokens.

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Eyal and Shopin, on the other hand, are charged with violating both registration and antifraud provisions of federal securities laws. The SEC is seeking civil penalties, disgorgement and permanent injunctions, as well as to bar Eyal from participating in any future token sales.

“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,” Berger said.