The U.S. Securities and Exchange Commission (SEC) has announced charges against a blockchain-based jobs platform, Boon.Tech, and its chief executive officer, Rajesh Pavithran, over its failure to register their initial coin offering (ICO) token as a security and allegedly misleading investors.
According to an announcement made by the agency, Boon.Tech and its CEO raised $5 million via an ICO from November 2017 to January 2018. They sold Boon Coins to more than 1,500 investors to develop their platform, which connects employers with freelancers.
The SEC’s announcement claims the regulator found Boon Coins were securities the firm failed to register. It reads:
- The order finds that the Boon Coins were offered and sold as investment contracts and were therefore securities, and that Boon.Tech and Pavithran failed to register the offering.
Moreover, the SEC added that Boon.Tech and Pavithran made “false and misleading statements” by saying that Boon Coins were stablecoins because of their own patent-pending technology that “eliminated volatility inherent in the digital asset markets” be hedging the coins against the US dollar. In reality, the SEC says, Boon.Tech had no such patent-pending technology.
The firm also misrepresented investors by claiming its platform was faster and more scalable because it used its own blockchain, the SEC says, when in reality it was “developed on the same public blockchain as its competitors.” Kristina Littman, Chief of the SEC Enforcement Division’s Cyber Unit, said:
Investors are entitled to truthful disclosures from issuers of securities, whether digital or otherwise. Pavithran and Boon.Tech defrauded investors by convincing them to fund this endeavor based on the allure of innovation that simply did not exist.
According to the regulator, Boon.Tech and Pavithran violated the antifraud and registration provision of the federal securities laws. While they neither admitted nor denied the SEC’s findings, they agreed to settle the charges. Boon.Tech will have to disgorge the $5 million it raised in its ICO, plus prejudgement interest of $600,335.
The SEC’s order further requires Boon.Tech and Pavithran to destroy all Boon Coins in their possession, and ask cryptoasset trading platforms to delist the cryptocurrency. Pavithran will pay a $150,00 fine and is barred from serving as an officer or director in a public company.
Featured image via Pixabay.