SEC Charges Rivetz with Unregistered Securities Offering

In September 2021, the U.S. Securities and Exchange Commission (SEC) filed a lawsuit against Rivetz Corp., its subsidiary Rivetz International SEZC, and founder Steven Sprague. The SEC alleged that Rivetz conducted an unregistered securities offering by raising $18 million through an initial coin offering (ICO) of its RvT token in 2017.

Allegations of Securities Law Violations

According to the SEC’s complaint, Rivetz and Sprague offered and sold digital asset securities without registering the offering or qualifying for an exemption, violating federal securities laws. The ICO was promoted to investors in the United States and abroad. With claims that the funds would be used to develop cybersecurity solutions for digital devices.

Key Points from the SEC Complaint

• Unregistered Offering: The SEC contended that the RvT tokens constituted securities and that their sale required registration with the SEC, which Rivetz did not obtain.
• Promotion to Investors: The company and its CEO were accused of actively promoting the ICO to potential investors. Highlighting investment potential without adhering to regulatory requirements.
• Use of Funds: Rivetz allegedly did not use the funds as promised, and the SEC claimed that investors did not receive the protections that come with registered offerings.

Legal Proceedings

As of October 2023, the case was ongoing, and no final judgment had been reported. The SEC sought permanent injunctions, disgorgement of ill-gotten gains with interest, and civil penalties against Rivetz and Sprague.

Impact on the Cryptocurrency Industry

The SEC’s action against Rivetz underscores the regulatory body’s increasing scrutiny of ICOs and digital asset offerings. It serves as a reminder to cryptocurrency companies about the importance of complying with federal securities laws when offering digital tokens to investors.

The outcome of this case may have significant implications for future ICOs and the regulatory landscape of digital assets. Companies considering token offerings should ensure they are in full compliance with securities regulations to avoid similar legal challenges.