On Monday, a U.S. federal court in Massachusetts delivered a significant ruling against Rivetz Corp., finding the firm guilty of illegally selling unregistered securities. This decision comes in favor of the Securities and Exchange Commission (SEC), which had taken action against the company for its financial practices.
Rivetz Found Guilty of Illegal Securities Sales
The court’s ruling determined that Rivetz and its founder violated securities laws by offering and selling unregistered digital tokens, known as RvT, between 2017 and 2018. These tokens were marketed during an initial coin offering (ICO) that raised approximately $18 million. Despite Rivetz’s claims that the tokens would serve as a utility for enhancing the security of devices and data on the blockchain, the SEC argued that they were sold as investment contracts without the required registration.
Misleading Investors and Broken Promises
The SEC posited that investors were misled into thinking they were making a sound investment connected to Rivetz’s anticipated success. The court agreed, asserting that Rivetz’s ICO constituted the sale of unregistered securities, which is a direct violation of the Securities Act of 1933. The ruling highlights a growing concern regarding transparency and accountability in the marketing and sale of digital assets, calling into question the legitimacy of many similar projects in the crypto space.
Mango DAO Settles SEC Charges
In a related development, the SEC also settled charges against Mango DAO regarding the unregistered sale of its MNGO tokens. The organization agreed to pay $700,000 to resolve the allegations connected to the unregistered offering of $70 million worth of its tokens. The SEC classified MNGO tokens as securities under U.S. law, which raises important questions about the regulatory treatment of tokens issued by decentralized autonomous organizations (DAOs).
Terms of the Mango DAO Settlement
As part of the settlement, Mango DAO agreed to cease trading its MNGO tokens on all exchanges and to destroy any remaining tokens in circulation. Additionally, the SEC reached a separate agreement with Mango Labs LLC, a developer associated with Mango DAO, regarding unregistered broker activity. Notably, both parties resolved these issues without admitting or denying the allegations, which is a common practice in such settlements.
Conclusion
The recent rulings involving Rivetz Corp. and Mango DAO underscore the increasing scrutiny that cryptocurrency firms face from regulatory authorities. As the SEC continues to assert its oversight over digital assets, companies must ensure compliance with existing securities laws to avoid significant legal consequences. The marketplace is undoubtedly evolving, and this evolution will likely lead to more regulatory clarity as the industry matures.