Rivetz has been charged by the US Securities and Exchange Commission (SEC) with an alleged $18 million illegal securities offering.
Rivetz was created in 2013, and the now-defunct blockchain hardware company is accused of raising $18 million from more than 7,200 investors through an unregistered securities offering between July and September 2017.
Rivetz Corp., its founder Steven Sprague, and the firm’s subsidiary Rivetz International are named as defendants in the SEC’s Sept. 8 complaint.
The RvT cryptocurrency was promoted and sold as an investment opportunity, according to the SEC, and was utilized to capitalize on Rivetz’s business in establishing an app, ecosystem, and cyber security devices.
Despite the product being “not-operational” at the time of the offering, the defendants marketed RvT tokens as “investments that purchasers could acquire and sell on the secondary market,” according to the SEC:
“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.”
The RvT tokens were purchased with Ether by investors. Rivetz and Sprague allegedly liquidated all of the Ether received through Rivetz International after the original transaction, according to the SEC.
The money was used to support operations, offer Spraque a $1 million bonus, and a separate $2.5 million loan that he used to “purchase a property in the Cayman Islands that he then leased back to Rivetz Int’l,” according to the complaint.
The SEC is seeking injunctive relief, the restoration of “ill-gotten earnings,” prejudgment interest, and a civil penalty if the defendants are proven guilty.
Is the SEC on the verge of declaring war?
The SEC has been in the news this month as the regulator takes action — or threatens to take action — against a number of cryptocurrency firms.
The SEC charged famed Ponzi-scheme BitConnect with an alleged unregistered securities sale that netted $2 billion on Sept. 2, according to Cointelegraph.
According to reports, the enforcement authority was also looking into Uniswap, a decentralized exchange (DEX), for its marketing and investment services.
Coinbase CEO Brian Armstrong disclosed earlier this week that the SEC had threatened to sue the company if it introduced a stablecoin yield program that it considered 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