Tech firm charged by US regulator for $5 million ICO fraud. Virginia-based Boontech and CEO, Rajesh Pavithran is charged for fraud and registration violations. The charges stem from an initial coin offering ( ICO), which raised $5 million in return for Boon Coins from 1,500 investors worldwide.
In return, Pavithran and his firm promised to develop and market a platform that would connect employers posting jobs with freelancers seeking work. The SEC says the alleged offenses were committed from November 2017 through January 2018.
According to the SEC order, “Boon Coins were offered and sold as investment contracts and were, therefore securities.” The order states that both Boontech and Pavithran failed to register the offering.
The order finds that Pavithran and Boontech made “false and misleading statements, including claims that Boon Coins were stable and secure.”
Pavithran and Boontech also argued, according to the SEC, that “their platform reduced the uncertainty inherent in the digital asset markets by using patent-pending technology to hedge Boon Coins against the US dollar, when Boontech did not have such patent-pending technology in reality.”
Chief of the SEC Enforcement Division’s Cyber Unit, Kristina Littman said “Investors are entitled to truthful disclosures from issuers of securities, whether digital or otherwise. Pavithran and Boontech defrauded investors by convincing them to fund this endeavor based on the allure of innovation that simply did not exist.”
According to the SEC, Pavithran and the tech company violated the antifraud and registration provisions of the federal securities laws.
Meanwhile, the SEC order reveals that both Boontech and Pavithran, “agreed to settle the charges by consenting to the issuance of the order.”
Boontech now has to “dispose of the $5 million earned in the ICO plus a $600,334 prejudgment interest.” The order allows Pavithran to pay a $150,000 fine, and prohibits him from working as a public company officer or director.
Boontech and Pavithran must also destroy all Boon Coins in their possession and issue requests to remove Boon Coins from any further trading on all third-party digital asset trading platforms.
[image: Luke Michael]
