SEC Wins $18M Unregistered ICO Case Against Cybersecurity Firm Rivetz

The United States Securities and Exchange Commission (SEC) has secured a legal victory against cybersecurity firm Rivetz Corp. and its CEO, Steven Sprague, over allegations of selling unregistered securities through the company’s initial coin offering (ICO).

The SEC argued that Sprague’s actions violated securities laws by offering and selling Rivetz tokens without proper registration.

The Judgment

A ruling by federal judge Mark Mastroianni, issued on September 30, sided with the SEC’s position, marking another success for the regulator. 

According to the complaint, the financial watchdog claimed that Rivetz sold $18 million worth of tokens to over 7,200 investors in 2017, violating securities laws by offering and selling the tokens without proper registration.

However, Sprague maintained that the ICO did not constitute a securities offering subject to registration under the Securities Act. He asserted that the Rivetz (RVT)  token was merely a software utility product, not an investment contract. 

The court disagreed, highlighting that the firm’s initial statements during the ICO suggested that the token could potentially enhance a security ecosystem for mobile devices.

After reviewing the evidence, the court ruled in favor of the SEC’s motion for summary judgment and denied Sprague’s countermotion. The decision affirms the regulator’s argument that the ICO involved unregistered securities.

The financial watchdog and Sprague are set to negotiate potential monetary penalties, with a deadline for resolution on October 22, 2024. If Sprague chooses to contest the ruling, he must file an objection by November 5, 2024.

Rivetz Announces ICO

Rivetz Corp. is a Delaware-based cybersecurity firm developing solutions to enhance mobile device security. 

Founded in 2013 by Steven Sprague and his brother, the company ventured into the cryptocurrency sector in June 2017 when it announced plans to launch a blockchain-based token designed to support global authentication solutions.

Sprague has served as the firm’s President and CEO and is also its largest shareholder.

Sprague described the ICO as an opportunity for customers to pre-order access to the company’s planned services. Later that month, the company released a white paper outlining its goal of establishing a global attestation and identity network powered by the Rivetz token.

Following legal developments, the price of RVT saw a slight uptick. As of writing, the token is trading at $0.00071756, up 2.85% in the last 24 hours according to CoinMarketCap.

The token operates on the Ethereum platform, with a total supply of 200 million and 26,244,468.18 tokens in circulation.