SEC charges Rivetz $18M ICO aiming for a return of “ill-gotten gains”

The United States Securities and Exchange Commission (SEC) has charged Rivetz on the basis of an alleged illegal securities offering that raised around $18 million. Rivetz was found in 2013 and this non-functioning blockchain hardware firm was accused of creating $18 million through an unregistered securities offering between July and September of 2017 from more than 7,200 investors. 

The SEC’s sept. 8 complaint states defendants Rivetz Corp., founder Steven Sprague and the firm’s subsidiary Rivetz international. The ICO focused on the RvT token which the SEC states publicized and sold it as an investment opportunity and used to capitalize on Rivetz’s business in building an app, ecosystem and cyber security hardware. The SEC states that the defendants value the RvT tokens as “investments that purchasers could buy and sell on the secondary market” even though the product was “non-operational” during the time it was offered.

“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 Rivertz did not have ‘a specific release date’ for the Rivetz app through which consumers could sue the RvT token.” Investors used Ether to buy the RvT tokens. After the initial sale, the SEC reportedly states that Rivetz and Sprague liquidated all of the Ether received through Rivetz international. 

In the complaint it is mentioned that the money was used to fund operations. Sprague was given a $1 million bonus and another loan of $2.5 million which he used to “purchase a house in the Cayman Islands that he then leased back to Rivertz Int’l.” during this week Coinbase CEO Brian Armstrong stated that the SEC was threatening to sue the firm if it launched a stablecoin yield program it deems as a security.