Post-SPAC Music Streaming Company Reaches $38.8 Million Settlement in Ongoing Fraud Action
Akazoo S.A., a Greece-based fake music streaming company, defrauded investors by falsely claiming millions of users and $120M in revenue to secure a $55M SPAC merger, then depleted over $20M in funds while lying about its performance, resulting in a $38.8M SEC settlement with $35M going to victims.
Akazoo S.A. misrepresented itself as a thriving music streaming service with 38.2 million registered users, 4.6 million paying subscribers, and over $120 million in annual revenue to complete a 2019 SPAC merger that brought in nearly $55 million. In reality, the company had no paying subscribers and negligible revenue, yet continued to deceive retail investors post-merger by fabricating growth metrics and financial results, depleting more than $20 million of investor funds. The SEC froze Akazoo’s assets in September 2020, preserving $31.5 million, and secured a $38.8 million settlement in disgorgement, largely satisfied by $35 million paid to victims and settlements from private class actions, along with a permanent injunction against securities fraud and reporting violations.
Akazoo S.A., a Greece-based company falsely presented itself as a rapidly growing music streaming service with over 38 million registered users, 4.6 million paying subscribers, and $120 million in annual revenue to facilitate a 2019 SPAC merger that generated nearly $55 million in investor funding. In truth, Akazoo had no paying subscribers and generated negligible revenue, yet it continued to mislead retail investors after going public on Nasdaq by fabricating claims of 28% year-over-year subscriber growth and tens of millions in 2019 revenue. The SEC filed an emergency action in September 2020, resulting in a court-ordered asset freeze that preserved $31.5 million in cash and other assets. In April 2021, Akazoo agreed to a bifurcated judgment that permanently enjoined it from violating federal antifraud and reporting provisions, without admitting or denying the allegations. The $38.8 million settlement announced today fully resolves the SEC’s litigation, with $35 million directed to victim investors and the remainder satisfied through settlements in related private class action lawsuits. The SEC credited its investigation team and the asset freeze for ensuring investor recovery and emphasized its ongoing focus on holding fraudsters accountable in SPAC transactions. The case underscores the agency’s commitment to exposing deceptive practices in the rapidly growing SPAC market.
Exhibits & Attached Documents (2)
Extracted insights
- $120.00M $120 million $100M–$1B
- $55.00M $55 million $10M–$100M
- $38.80M $38.8 million $10M–$100M
- $35.00M $35 million $10M–$100M
- $31.50M $31.5 million $10M–$100M
- $20.00M $20 million $10M–$100M
- person b. david fraser
- person carol stumbaugh
- person david peavler
- person Eric Werner
- person Matthew Gulde
- person melvin warren
- person samantha s. martin
- person scott f. mascianica
- agency sec's fort worth regional office
- agency Securities and Exchange Commission
- SEC announced settlement against Akazoo S.A. for $38.8 million
- Akazoo S.A. is based in Greece
- Akazoo S.A. allegedly defrauded investors out of tens of millions of dollars
- Akazoo S.A. entered into SPAC business combination in 2019
- Akazoo S.A. received from SPAC and investors nearly $55 million
- Akazoo S.A. became listed on Nasdaq
- Akazoo S.A. misrepresented revenue in 2019 as tens of millions of dollars
- Akazoo S.A. depleted more than $20 million of investor funds
- SEC filed emergency action in September 2020
- SEC froze assets of Akazoo S.A. worth $31.5 million
- Akazoo S.A. agreed to asset freeze in October 2020
- Akazoo S.A. agreed to bifurcated judgment in April 2021
- Akazoo S.A. ordered to pay in disgorgement $38.8 million
- Akazoo S.A. agreed to pay to investor victims $35 million
- David Peavler is Regional Director of SEC's Fort Worth Regional Office
- Samantha S. Martin conducted SEC investigation of Akazoo S.A.
- Melvin Warren conducted SEC investigation of Akazoo S.A.
- Carol Stumbaugh conducted SEC investigation of Akazoo S.A.
- Scott F. Mascianica supervised SEC investigation of Akazoo S.A.
- Eric Werner supervised SEC investigation of Akazoo S.A.
- Matthew Gulde led litigation against Akazoo S.A.
- B. David Fraser supervised litigation against Akazoo S.A.
- Akazoo S.A. claimed to have registered users more than 38.2 million
- Akazoo S.A. claimed to have paying subscribers 4.6 million
- Akazoo S.A. claimed annual revenue of over $120 million
The Securities and Exchange Commission today announced a $38.8 million settlement of charges against Akazoo S.A., a purported music streaming business based in Greece, for allegedly defrauding investors out of tens of millions of dollars in connection with a 2019 special purpose acquisition company (SPAC) business combination. Akazoo's assets were previously frozen as the result of an emergency action filed by the SEC in September 2020. According to the SEC's complaint, Akazoo represented to investors that it was a rapidly growing music streaming company focused on emerging markets with more than 38.2 million registered users, 4.6 million paying subscribers, and over $120 million in annual revenue. In actuality, the complaint alleged that the company had no paying users and, at most, negligible revenue. Akazoo allegedly leveraged these misrepresentations to enter into a SPAC business combination in 2019, in which the company received nearly $55 million from the SPAC and other investors. According to the complaint, after the business combination, Akazoo became listed on Nasdaq and proceeded to defraud retail investors by misrepresenting, among other things, that it had earned tens of millions of dollars in revenue during 2019 and increased its paying subscriber base by 28% year-over-year. In reality, the company allegedly continued to have limited operations, no subscribers, and marginal revenue, all while depleting more than $20 million of investor funds. The SEC filed its emergency action to, among other things, preserve the company's remaining $31.5 million in cash and other assets. In October 2020, the court signed and entered an agreed stipulation whereby Akazoo agreed to an asset freeze. In April 2021, without admitting or denying the allegations, Akazoo agreed to a bifurcated judgment that permanently enjoined the company from violating, among other things, the antifraud and reporting provisions of the federal securities laws. The settlement announced today fully resolves the litigation by ordering Akazoo to pay $38.8 million in disgorgement, an amount that will be deemed satisfied by the company's payment of $35 million to the investors victims and settlements in connection with several private class action lawsuits. "One goal in filing this emergency action was to preserve assets for the benefit of injured investors, and this resolution accomplishes that goal," said David Peavler, Regional Director of the SEC's Fort Worth Regional Office. "The SEC is intently focused on SPAC merger transactions, and we will continue to hold wrongdoers in this space accountable." The SEC's investigation, which is ongoing, is being conducted by Samantha S. Martin, Melvin Warren, and Carol Stumbaugh of the SEC's Fort Worth Regional Office, under the supervision of Scott F. Mascianica and Eric Werner. Matthew Gulde led the litigation against Akazoo under B. David Fraser's supervision.
The Securities and Exchange Commission today announced a $38.8 million settlement of charges against Akazoo S.A., a purported music streaming business based in Greece, for allegedly defrauding investors out of tens of millions of dollars in connection with a 2019 special purpose acquisition company (SPAC) business combination. Akazoo's assets were previously frozen as the result of an emergency action filed by the SEC in September 2020. According to the SEC's complaint, Akazoo represented to investors that it was a rapidly growing music streaming company focused on emerging markets with more than 38.2 million registered users, 4.6 million paying subscribers, and over $120 million in annual revenue. In actuality, the complaint alleged that the company had no paying users and, at most, negligible revenue. Akazoo allegedly leveraged these misrepresentations to enter into a SPAC business combination in 2019, in which the company received nearly $55 million from the SPAC and other investors. According to the complaint, after the business combination, Akazoo became listed on Nasdaq and proceeded to defraud retail investors by misrepresenting, among other things, that it had earned tens of millions of dollars in revenue during 2019 and increased its paying subscriber base by 28% year-over-year. In reality, the company allegedly continued to have limited operations, no subscribers, and marginal revenue, all while depleting more than $20 million of investor funds. The SEC filed its emergency action to, among other things, preserve the company's remaining $31.5 million in cash and other assets. In October 2020, the court signed and entered an agreed stipulation whereby Akazoo agreed to an asset freeze. In April 2021, without admitting or denying the allegations, Akazoo agreed to a bifurcated judgment that permanently enjoined the company from violating, among other things, the antifraud and reporting provisions of the federal securities laws. The settlement announced today fully resolves the litigation by ordering Akazoo to pay $38.8 million in disgorgement, an amount that will be deemed satisfied by the company's payment of $35 million to the investors victims and settlements in connection with several private class action lawsuits. "One goal in filing this emergency action was to preserve assets for the benefit of injured investors, and this resolution accomplishes that goal," said David Peavler, Regional Director of the SEC's Fort Worth Regional Office. "The SEC is intently focused on SPAC merger transactions, and we will continue to hold wrongdoers in this space accountable." The SEC's investigation, which is ongoing, is being conducted by Samantha S. Martin, Melvin Warren, and Carol Stumbaugh of the SEC's Fort Worth Regional Office, under the supervision of Scott F. Mascianica and Eric Werner. Matthew Gulde led the litigation against Akazoo under B. David Fraser's supervision.