The U.S. Securities and Exchange Commission (SEC) has settled fraud and securities violations charges against SoluTech, a now-defunct blockchain project. Last week, the SEC announced the project’s co-founder and chief executive officer, Nathan Pitruzzello, was slapped with a cease-and-desist order for selling unregistered securities and was also fined $25,000. He can also never host digital asset security offering again. SoluTech raised $2.4 million in an initial coin offering from over 100 investors, including investors from the United States.
In the settlement, the blockchain company was ordered to destroy all its tokens within the next 30 days and block its trading on the secondary market in 10 days.
“The company’s tokens fall under the category of securities.”
The U.S. securities market regulator alleged that the company’s tokens fall under the category of securities based on the Howey test. Still, it did not obtain any approvals from the SEC for selling them. Thus SoluTech was balmed for selling unregistered securities from April 2018 through March 2019. Pitruzzello was also accused of “recklessly” misrepresenting the company’s revenue and the capabilities and development process of the products.
In 2019 to sell Series A stock, SoluTech and Pitruzzello recklessly misrepresented to potential investors that other investors had provided term sheets to the company demonstrating their interest in investing in exchange for shares of the company’s preferred and capital stock.
Crypto scams continue to rise amid the pandemic.
The US SEC has clamped down on many crypto companies for allegedly conducting illegal initial coin offerings (ICOs). Crypto regulations in most countries are still in a grey area. Many countries around the world have reported a surge in crypto scams this year amid the ongoing global pandemic. The increase in the cryptocurrency-related scams has raised concerns among the regulators across countries.