The SEC alleged that some of the proceeds from the offering were used to give the founder a bonus of $1 million and a loan of $2.5 million which he used to purchase a house in the Cayman Islands.
The United States Securities and Exchange Commission (SEC) has charged Rivetz over an alleged illegal securities offering that fetched around $18 million.
Rivetz was founded in 2013 and the now-defunct blockchain hardware firm has been accused of generating $18 million via an unregistered securities offering between July and September of 2017 from more than 7,200 investors.
The SEC’s Sept. 8 complaint names defendants Rivetz Corp., founder Steven Sprague and the firm’s subsidiary Rivetz International. The ICO revolved around the RvT token, which the SEC states was promoted and sold as an investment opportunity and used to capitalize on Rivetz’s business in building an app, ecosystem and cyber security hardware.
The SEC asserts that the defendants touted the value of RvT tokens as “investments that purchasers could buy and sell on the secondary market” despite the product being “not-operational” at the time of offering:
“Token buyers could not purchase any goods and services using RvT tokens, and the tokens had no other use in any Rivetz product or service. In fact, several months after the tokens were distributed […] Sprague stated on social media that Rivetz did not have ‘a specific release date’ for the Rivetz app through which consumers could use the RvT token.”
Investors used Ether to purchase the RvT tokens. Following the initial sale, the SEC alleges that Rivetz and Sprague liquidated all of the Ether received via Rivetz International.
The complaint states the money was used to fund operations, give Spraque a $1 million bonus and a separate loan of $2.5 million which he used to “purchase a house in the Cayman Islands that he then leased back to Rivetz Int’l.”
If the defendants are found guilty the SEC is seeking injunctive relief, the return of what it calls “ill-gotten gains,” prejudgment interest and a civil penalty.
Related: US SEC releases fresh investor alert against crypto investment scams
Is the SEC on the war path?
The SEC has been making headlines throughout September as the enforcement body takes action — or threatened to — against multiple crypto firms this month.
On Sept. 2 Cointelegraph reported that the SEC charged notorious Ponzi-scheme BitConnect as an alleged unregistered securities offering that netted $2 billion. Reports surfaced the enforcement body was also investigating decentralized exchange (DEX) Uniswap over its marketing and investor services.
Earlier this week Coinbase CEO Brian Armstrong revealed that the SEC was threatening to sue the firm if it launched a stablecoin yield program it deems as security.
The question shouldn’t be, “is the yield product a security?”
The question is, “Why can’t a reputable company offer a useful service to customers that want it, without getting sued by regulators in the god damned United States of America?”
— Erik Voorhees (@ErikVoorhees) September 9, 2021
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