Rivetz was charged by the US Securities and Exchange Commission (SEC) more than its initial coin offering (ICO) of $18 million in 2017, Recently Released Litigation to watch.
The blockchain hardware company was founded in 2013 and held an ICO in 2017, when the coin fundraising craze was at its peak. Over 7,200 individuals have invested in the RVT token at the time – with the ICO running from July 2017 to September 2017.
But that’s where the legal issues started, at least with the SEC. The US agency said Rivetz offers investment products without a viable use case or product for its tokens, even as Rivetz itself touted the offering as an app that would help build its app, cybersecurity service, and additional hardware.
“Token buyers were not able to purchase any goods or services using RvT tokens, and the tokens had no other use in any Rivetz product or service. Indeed, several months after the tokens were distributed […] Sprague stated on social media that Rivetz does not have a specific release date for the Rivetz app by which consumers can use the RvT token, the Securities and Exchange Commission’s litigation noted.
Where did the money go?
So what happened to all that money? According to the Securities and Exchange Commission, the proceeds went to fund founder Stephen Sprague’s lavish lifestyle – such as a $2.5 million home in the Cayman Islands and a $1 million bounty.
Moreover, tokens have been marketed as an investment opportunity rather than a means of financing. “During the show, the defendants promoted the value of RvT tokens as investments that buyers could buy and sell in the secondary market, despite the fact that the product was not in operation at the time of the offering,” the SEC filing stated.
On social media after the distribution, Rivetz stated that it was “working with a number of exchanges” to list RvT tokens, and on its website provided a list and links to online platforms where investors could buy and sell RvT tokens.
If the defendants are found guilty, the SEC will seek injunctive relief, reinstatement of what it calls “unfair gains,” prejudice interest, and civil punishment. As such, the fee comes on the back of recent lawsuits against BitConnect and Ripple.
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