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SEC Sues Rivetz Corp Over $18 Million in Token Sales

source-logo  cryptoknowmics.com 10 September 2021 09:30, UTC

The US Securities and Exchange Commission (SEC) has charged cryptocurrency startup Rivetz with selling unregistered securities that generated $18 million in sales.

SEC Charges Rivetz for  $18 Million IIIegal Securities Offering

According to a September 8 complaint, SEC has charged Rivetz Corp., its founder Steven Sprague and a subsidiary Rivetz International with selling illegal securities to over 7,200 investors.

The defendants sold RvT tokens between July and September 2017 and raised $18 million to finance Rivetz’s business. The ICO was marketed as an investment opportunity “that purchasers could buy and sell on the secondary market”, even though it was “not operational” at the time of its 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," SEC noted in the court document. 

Most investors purchased RvT tokens using Ether, which was entirely liquidated by Rivetz and Sprague after the initial sale. 

The SEC states that a significant portion of investor funds was allotted to Sprague as a salary bonus ($1 million) and a separate loan ($2.5 million) to “purchase a house in the Cayman Islands that he then leased back to Rivetz Int’l.”

As part of the charges, the SEC is seeking injunctive relief, the return of what it terms as “ill-gotten” gains, prejudgment interest, and a civil penalty.

SEC Stepping Up Action Against Fraudulent Crypto Firms

In the last few months, SEC seems to be stepping up its efforts to prevent unregistered crypto firms from duping investors. 

Earlier this month, the federal agency brought charges against BitConnect’s infamous Ponzi scheme that racked up $2 billion. Shortly after, reports emerged that SEC was looking into Uniswap’s services. If the decentralized exchange is found violating SEC’s norms, the regulator could outlaw DeFi transactions like "transacting on the Dark Web", according to crypto investor Alistair Milne.