Four Years After the Act, SEC Charges Issuers for An $18 Mln Unregistered ICO

This week, the US Securities and Exchange Commission (SEC) charged Steven K. Sprague, President of Rivetz Corp and CEO of Rivetz International SEZC, and both the companies with conducting an illegal, unregistered offering of securities through an initial coin offering (ICO). It raised $18 million in Ether through this ICO that was not registered with the SEC and did not qualify for an exemption from registration from more than 7,200 investors. According to the SEC's complaint, the ICO was conducted during the last bull run, between July and September 2017, during which the defendants sold digital assets called “RvT tokens” to the general public, including US investors. The complaint alleges that the CEO marketed the digital tokens as an investment opportunity by promoting the value of RvT to investors. The promotion included highlighting that RvT would be listed on cryptocurrency exchanges for trading, touting Sprague's abilities and managerial skills, and claiming that the token would increase in value as a result of Rivetz's efforts. However, the RvT tokens could not be used to purchase any goods or services at the time they were sold, the complaint adds. The SEC has now, after four years since the sales, charged the defendants with violating the securities registration provisions of Section 5 of the Securities Act of 1933. For this, the SEC praised the assistance of the Cayman Islands Monetary Authority. The agency is seeking injunctive relief, the return of allegedly ill-gotten gains plus prejudgment interest, and a civil penalty.