The SEC has charged Rivetz in connection with a $18 million ICO and is seeking the restoration of ‘ill-gotten earnings.’

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According to the SEC, some of the funds from the offering were used to award the founder a $1 million bonus and a $2.5 million loan, which he used to buy a residence in the Cayman Islands.

The Securities and Exchange Commission (SEC) of the United States has charged Rivetz in connection with an alleged illegal securities offering for approximately $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.”

The RvT tokens were purchased with Ether by investors. The SEC claims that after the initial transaction, Rivetz and Sprague liquidated all of the Ether received through Rivetz International.

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According to the lawsuit, the funds were used to support operations, offer Spraque a $1 million bonus, and make a second $2.5 million loan to him, which he used to “purchase a property in the Cayman Islands, which he subsequently leased back to Rivetz Int’l.”

If the defendants are found guilty, the SEC intends to seek injunctive relief, the restoration of “ill-gotten gains,” prejudgement interest, and a civil penalty.

Is the SEC on the war path?

The SEC has been making news throughout September as the regulatory body takes action – or threatens to take action – against a number of cryptocurrency enterprises this month.

The SEC charged famed Ponzi-scheme BitConnect with an alleged unregistered securities sale that netted $2 billion on September 2. According to reports, the enforcement authority was also looking into decentralised exchange (DEX) Uniswap’s marketing and investment services.

Earlier this week, Coinbase CEO Brian Armstrong said that the SEC had threatened to sue the company if it established a stablecoin yield programme that it considered security.

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