The Securities and Exchange Commission (SEC) has announced charges against Boon.Tech and its CEO Rajesh Pavithran alleging fraud and registration violations in connection with a $5 million initial coin offering (ICO).
According to the SEC’s order, from November 2017 to January 2018, Boon.Tech raised approximately $5 million by selling Boon Coins to more than 1,500 investors in the U.S. and worldwide.
The SEC’s order finds that the Boon Coins were offered and sold as investment contracts and were therefore securities and that the company failed to register the offering.
To quote the SEC:
“Further, the order finds that Pavithran and Boon.Tech made false and misleading statements, including claims that Boon Coins were stable and secure because Boon.Tech’s platform eliminated volatility inherent in the digital asset markets by using patent-pending technology to hedge Boon Coins against the U.S. dollar, when in fact Boon.Tech had no such patent-pending technology. The order also finds that Boon.Tech and Pavithran misrepresented to investors that Boon.Tech’s platform was faster and more scalable than its competitors because it was built on Boon.Tech’s own blockchain, when in reality the platform was being developed on the same public blockchain as its competitors.”
The SEC’s order indicates that the respondents have “submitted an Offer of Settlement which the Commission has determined to accept.”
The SEC order also states that due to challenges in developing and operating the platform, Boon.Tech has determined that its business plan would not be viable and is in the process of winding down its operations entirely.
“Investors are entitled to truthful disclosures from issuers of securities, whether digital or otherwise,” stated Kristina Littman, Chief of the SEC Enforcement Division’s Cyber Unit. “Pavithran and Boon.Tech defrauded investors by convincing them to fund this endeavor based on the allure of innovation that simply did not exist.”
The SEC’s order finds that Boon.Tech and Pavithran violated the antifraud and registration provisions of the 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 order also requires Boon.Tech and Pavithran to destroy all Boon Coins in their possession, issue requests to remove Boon Coins from any further trading on all third-party digital asset trading platforms, and refrain from participating in any future offerings of digital asset securities. The order requires Pavithran to pay a penalty of $150,000 and bars him from serving as an officer or director of a public company.