US regulator charged Tech firm Boontech and CEO, Rajesh Pavithran for fraud and registration violations. The charges stem from an initial coin offering (ICO) that raised $5 million from 1,500 investors around the world in exchange for Boon Coins.
Pavithran and his company promised to develop and market a platform that connects employers posting jobs with freelancers seeking work.
According to the Regulator 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.
Furthermore, the order finds that Pavithran and Boontech made “false and misleading statements, including claims that Boon Coins were stable and secure.”
According to the Regulator, Pavithran and Boontech also claimed that “their 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 Boontech had no such patent-pending technology.”
According to the Regulator, Pavithran and the tech company violated the antifraud and registration provisions of the federal securities laws.
Consequently, Boontech is now required “to disgorge the $5 million raised in the ICO plus prejudgment interest of $600,334.”
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.