Crowd Freak, LLC - Notice and Order to Cease and Desist

        /    J STIPULATION AND CONSENT ORDER RESOLVING NOTICES AND ORDERS TO CEASE AND DESIST A. Relevant information and statutory provisions,    et seq.:    fa            fo           

12/21/21

   t.  :1  ft   fo 2/2/2 

STATE OF MICHIGAN DEPARTMENT OF LICENSING AND REGULATORY AFFAIRS CORPORATIONS, SECURITIES & COMMERCIAL LICENSING BUREAU In the Matter of: Complaint No. 343638 CROWD FREAK, LLC Unregistered Respondent. / Issued and entered This day of , NOTICE AND ORDER TO CEASE AND DESIST Linda Clegg, the Director ("Administrator") of the Securities, and Licensing Bureau ("Bureau"), pursuant to her statutory authority and responsibility to administer and enforce the Michigan Uniform Act (2002), PA 551, as amended, MCL 451.2101 et seq. ("Securities Act"), hereby orders Crowd Freak, LLC ("Respondent") to cease and desist from offering or selling unregistered securities, contrary to the Act. is notified of the opportunity to request a hearing in this matter. I. BACKGROUND A. The 1. Crowd Freak, LLC is a Michigan-organized limited liability company. It is not registered in any capacity under the Act and has not registered any offerings under the Act. B. Findings of Fact 1. The Bureau received a consumer complaint about and thereafter conducted an investigation of Respondent's activities under the Act in Michigan. 2. The investigation developed evidence that offered and sold investment contract to a Michigan investor. Respondent's were not registered under the Act and has not identified a relevant exemption from registration. STATE OF MICHIGAN DEPARTMENT OF LICENSING AND REGULATORY AFFAIRS CORPORATIONS, SECURITIES & COMMERCIAL LICENSING BUREAU In the Matter of: Complaint No. 343638 CROWD FREAK, LLC Unregistered Respondent. / Issued and entered This _____ day of ________________________________, 2021 NOTICE AND ORDER TO CEASE AND DESIST Linda Clegg, the Director (“Administrator”) of the Corporations, Securities, and Commercial Licensing Bureau (“Bureau”), pursuant to her statutory authority and responsibility to administer and enforce the Michigan Uniform Securities Act (2002), 2008 PA 551, as amended, MCL 451.2101 et seq. (“Securities Act”), hereby orders Crowd Freak, LLC (“Respondent”) to cease and desist from offering or selling unregistered securities, contrary to the Securities Act. Respondent is notified of the opportunity to request a hearing in this matter. I. BACKGROUND A. The Respondent 1. Crowd Freak, LLC is a Michigan-organized limited liability company. It is not registered in any capacity under the Securities Act and has not registered any securities offerings under the Securities Act. B. Findings of Fact 1. The Bureau received a consumer complaint about Respondent and thereafter conducted an investigation of Respondent’s activities under the Securities Act in Michigan. 2. The investigation developed evidence that Respondent offered and sold investment contract securities to a Michigan investor. Respondent’s securities were not registered under the Securities Act and Respondent has not identified a relevant exemption from registration.

Page of II. RELEVANT STATUTORY PROVISIONS 1. Section 102c(c) of the Act, MCL 451.2102c(c), defines "Security" in part as: a note; stock; treasury stock; security future; bond; debenture; evidence of indebtedness; certificate of interest or participation in a profit-sharing agreement; collateral trust certificate; preorganization certificate or subscription; transferable share; investment contract; voting trust certificate; certificate of deposit for a security; fractional undivided interest in oil, gas, or other mineral rights; put, call, straddle, option, or privilege on a security, certificate of deposit, or group or index of securities, including an interest in or based on the value of that put, call, straddle, option, or privilege on that security, certificate of deposit, or group or index of securities, put, call, straddle, option, or privilege entered into on a national exchange relating to foreign currency, an investment in a viatical or life settlement agreement; or, in general, an interest or instrument commonly known as a "security"; or a certificate of interest or participation in, temporary or interim certificate for, receipt for, guarantee of, or warrant or right to subscribe to or purchase, any of the foregoing... 2. Section of the Act, MCL 451.2301, states: A person shall not offer or sell a security in this state unless or more of the following are met: (a) The security is a federal covered security. (b) The security, transaction, or offer is exempted from registration under sections to 203. (c) The security is registered under this act. III. CONCLUSIONS OF LAW 1. Crowd Freak, LLC offered and sold investment contract to a Michigan investor. The were not federal covered, exempt from registration, or registered, contrary to section of the Act, MCL 451.2301. IV. ORDER IT IS THEREFORE ORDERED, pursuant to section of the Act, MCL 451.2604, that: Cease & Desist Order Crowd Freak, LLC Complaint No. 343638 Page of Page 2 of 4 Complaint No. 343638 Page 2 of 4 II. RELEVANT STATUTORY PROVISIONS 1. Section 102c(c) of the Securities Act, MCL 451.2102c(c), defines “Security” in part as: a note; stock; treasury stock; security future; bond; debenture; evidence of indebtedness; certificate of interest or participation in a profit-sharing agreement; collateral trust certificate; preorganization certificate or subscription; transferable share; investment contract; voting trust certificate; certificate of deposit for a security; fractional undivided interest in oil, gas, or other mineral rights; put, call, straddle, option, or privilege on a security, certificate of deposit, or group or index of securities, including an interest in or based on the value of that put, call, straddle, option, or privilege on that security, certificate of deposit, or group or index of securities, put, call, straddle, option, or privilege entered into on a national securities exchange relating to foreign currency, an investment in a viatical or life settlement agreement; or, in general, an interest or instrument commonly known as a “security”; or a certificate of interest or participation in, temporary or interim certificate for, receipt for, guarantee of, or warrant or right to subscribe to or purchase, any of the foregoing… 2. Section 301 of the Securities Act, MCL 451.2301, states: A person shall not offer or sell a security in this state unless 1 or more of the following are met: (a) The security is a federal covered security. (b) The security, transaction, or offer is exempted from registration under sections 201 to 203. (c) The security is registered under this act. III. CONCLUSIONS OF LAW 1. Respondent Crowd Freak, LLC offered and sold investment contract securities to a Michigan investor. The securities were not federal covered, exempt from registration, or registered, contrary to section 301 of the Securities Act, MCL 451.2301. IV. ORDER IT IS THEREFORE ORDERED, pursuant to section 604 of the Securities Act, MCL 451.2604, that:

Page of A. shall immediately CEASE AND DESIST from offering and selling unregistered in violation of the Act. B. Pursuant to section 604(2) of the Act, this Notice and Order to Cease and Desist is IMMEDIATELY EFFECTIVE. C. In a Final Order, the Administrator intends to impose civil fines of $10,000.00 against under MCL 451.2604(4). D. Pursuant to section of the Act, MCL 451.2508, a person that willfully violates the Act, or an order issued under the Act, is guilty of a felony punishable by imprisonment for not more than years or a fine of not more than $500,000.00 for each violation, or both. An individual convicted of violating a rule or order under this act may be fined, but shall not be imprisoned, if the individual did not have knowledge of the rule or order. E. The Administrator retains the right to pursue further administrative action against under the Act if the Administrator determines that such action is necessary and appropriate in the public interest, for the protection of investors and is authorized by the Act. V. NOTICE OF OPPORTUNITY FOR HEARING Section of the Act, MCL 451.2604, provides that has days beginning with the first day after the date of service of this Notice and Order to Cease and Desist to submit a written request to the Administrator asking that this matter be scheduled for a hearing. If the Administrator receives a written request in a timely manner, the Administrator shall schedule a hearing within days after receipt of the request. The written request for a hearing must be addressed to: & Licensing Bureau Regulatory Compliance Division P.O. Box 30018 Lansing, MI 48909 By email to CSCL-FOIA@michigan.gov VI. ORDER FINAL ABSENT HEARING REQUEST A. Under section of the Act, MCL 451.2604, the Respondent's failure to submit a written request for a hearing to the Administrator within days after the service date of this NOTICE AND ORDER TO CEASE AND DESIST shall result in this order becoming a FINAL ORDER by operation of law. The FINAL ORDER includes the imposition of the fines cited described in section IV.C., and the Cease & Desist Order Crowd Freak, LLC Complaint No. 343638 Page of Page 3 of 4 Complaint No. 343638 Page 3 of 4 A. Respondent shall immediately CEASE AND DESIST from offering and selling unregistered securities in violation of the Securities Act. B. Pursuant to section 604(2) of the Securities Act, this Notice and Order to Cease and Desist is IMMEDIATELY EFFECTIVE. C. In a Final Order, the Administrator intends to impose civil fines of $10,000.00 against Respondent under MCL 451.2604(4). D. Pursuant to section 508 of the Securities Act, MCL 451.2508, a person that willfully violates the Securities Act, or an order issued under the Securities Act, is guilty of a felony punishable by imprisonment for not more than 10 years or a fine of not more than $500,000.00 for each violation, or both. An individual convicted of violating a rule or order under this act may be fined, but shall not be imprisoned, if the individual did not have knowledge of the rule or order. E. The Administrator retains the right to pursue further administrative action against Respondent under the Securities Act if the Administrator determines that such action is necessary and appropriate in the public interest, for the protection of investors and is authorized by the Securities Act. V. NOTICE OF OPPORTUNITY FOR HEARING Section 604 of the Securities Act, MCL 451.2604, provides that Respondent has 30 days beginning with the first day after the date of service of this Notice and Order to Cease and Desist to submit a written request to the Administrator asking that this matter be scheduled for a hearing. If the Administrator receives a written request in a timely manner, the Administrator shall schedule a hearing within 15 days after receipt of the request. The written request for a hearing must be addressed to: Corporations, Securities & Commercial Licensing Bureau Regulatory Compliance Division P.O. Box 30018 Lansing, MI 48909 By email to CSCL-FOIA@michigan.gov VI. ORDER FINAL ABSENT HEARING REQUEST A. Under section 604 of the Securities Act, MCL 451.2604, the Respondent’s failure to submit a written request for a hearing to the Administrator within 30 days after the service date of this NOTICE AND ORDER TO CEASE AND DESIST shall result in this order becoming a FINAL ORDER by operation of law. The FINAL ORDER includes the imposition of the fines cited described in section IV.C., and the

Page of fine amounts set forth below will become due and payable to the Administrator within sixty (60) days after the date this order becomes final: $10,000.00 — Crowd Freak, LLC, under section of the Act, MCL 451.2604. B. CIVIL FINE payments should be payable to the STATE OF MICHIGAN and contain identifying information (e.g., names and complaint numbers) and mailed to the following address: & Licensing Bureau Final Order Monitoring P.O. Box 30018 Lansing, MI 48909 C. Failure to comply with the terms of this Order within the time frames specified may result in additional administrative penalties, including the summary suspension or continued suspension of all registrations held by under the Act, the denial of any registration renewal, and/or the denial of any future applications for registration, until full compliance is made. may voluntarily surrender or withdraw a registration under the Act; however, the surrender or withdrawal will not negate the summary suspension or continued suspension of the relevant registrations or any additional administrative proceedings if a violation of this Order or the Act occurred. D. Failure to pay the civil fines within six (6) months after this Order becomes final may result in the referral of the civil fines to the Michigan Department of Treasury for collection action against Respondent. DEPARTMENT OF LICENSING AND REGULATORY AFFAIRS CORPORATIONS, SECURITIES, AND COMMERCIAL LICENSING BUREAU Cle Linda Clegg, Admini t tor and Director & Licensing Bureau Cease & Desist Order Crowd Freak, LLC Complaint No. 343638 Date Page of Page 4 of 4 Complaint No. 343638 Page 4 of 4 fine amounts set forth below will become due and payable to the Administrator within sixty (60) days after the date this order becomes final: $10,000.00 – Crowd Freak, LLC, under section 604 of the Securities Act, MCL 451.2604. B. CIVIL FINE payments should be payable to the STATE OF MICHIGAN and contain identifying information (e.g., names and complaint numbers) and mailed to the following address: Corporations, Securities & Commercial Licensing Bureau Final Order Monitoring P.O. Box 30018 Lansing, MI 48909 C. Failure to comply with the terms of this Order within the time frames specified may result in additional administrative penalties, including the summary suspension or continued suspension of all registrations held by Respondent under the Securities Act, the denial of any registration renewal, and/or the denial of any future applications for registration, until full compliance is made. Respondent may voluntarily surrender or withdraw a registration under the Securities Act; however, the surrender or withdrawal will not negate the summary suspension or continued suspension of the relevant registrations or any additional administrative proceedings if a violation of this Order or the Securities Act occurred. D. Failure to pay the civil fines within six (6) months after this Order becomes final may result in the referral of the civil fines to the Michigan Department of Treasury for collection action against Respondent. DEPARTMENT OF LICENSING AND REGULATORY AFFAIRS CORPORATIONS, SECURITIES, AND COMMERCIAL LICENSING BUREAU _____________________________________ _____________ Linda Clegg, Administrator and Director Date Corporations, Securities & Commercial Licensing Bureau