U.S. SEC Charges a Company and Its CEO for Fraudulent ICO
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U.S. SEC Charges a Company and Its CEO for Fraudulent ICO

Three days ago, a firm and its CEO were charged by the U.S. Securities and Exchange Commission (SEC) for violating registration rules and fraud regarding an initial coin offering (ICO).

The firm based in Virginia, known as Boontech and its CEO, Rajesh Pavithran, are facing charges due to the sale of Boon Coins to 1500 investors worldwide in an ICO that raised about $5 million between Nov. 2017 and Jan. 2018.

Boontech and Pavithran sold the coins with the promise that the money generated would be used in developing and marketing a platform to connect employers posting jobs with freelancers seeking work.

According to the SEC, their offering in the ICO was securities as they sold the Boon Coins as investment contracts. Likewise, they did not register the offering and made false and misleading statements regarding the stability and security of Boon Coins.

They claimed Boon.Tech platform’s elimination of volatility intrinsic in the digital asset markets through patent-pending technology to hedge Boon Coins against the USD. However, Boon.Tech does not have such patent-pending technology. 

They claimed that Boon.Tech’s platform was developed on blockchain owned by Boon.tech; hence, it is faster and more scalable than its competitors. Nevertheless, in reality, they are developing the platform on similar public blockchain as its competitors.

In the words of Kristina Littman, Chief of the SEC Enforcement Division’s Cyber Unit, those who issue securities (digital or otherwise) need to disclose the truth to investors. The SEC said the firm and its CEO acted in violation of anti-fraud and registration provisions of federal securities laws.

“Without admitting or denying the SEC’s findings, Boon.Tech and Pavithran agreed to settle the charges by consenting to the issuance of the order, which requires Boon.Tech to disgorge the $5 million raised in the ICO plus prejudgment interest of $600,334.”  

The SEC ordered the destruction of all Boon Coins, removal of Boon Coins from any further trading, and refraining from taking part in any future offerings of digital asset securities.  Pavithran will pay $150,000 as penalty and will never serve as an officer or director of a public firm.

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Born in Bucharest, Marius is the founder of Crypto Adventure and Co-founder of Crypto Press. Since his first contact with Bitcoin and cryptocurrencies, he never stopped believing that they are one of the most important innovations of our time, which will forever change the way business is done.