The Securities and Exchange Commission (SEC) said Thursday it has charged Virginia-based Boontech and its founder Rajesh Pavithran for fraud and failure to register the firm’s tokens that were sold as investment securities.
According to the SEC’s announcement, between November 2017 and January 2018, Boontech sold $5 million worth of its tokens, Boon Coins, to more than 1,500 investors in the United States, without registering the digital asset with the regulatory body.
The announcement said the firm and Pavithran made false statements about how they had managed to eliminate volatility for their digital asset by using “patent pending” technology to hedge it against the dollar, despite what the SEC said was the complete absence of such a technology.
While the firm and its founder claimed their platform was faster because it was built on a private blockchain, the SEC said these claims were also false and the firm used the same public blockchain as its competitors.
Without accepting or denying the charges, Boontech and Pavithran have settled the allegations by agreeing to disgorge $5 million, plus interest, raised by the token sales. The settlement also requires Boontech destroy all of the Boon Coins in their possession and withdraw them from all digital asset trading platforms.
In addition, the settlement requires Pavithran to pay a penalty of $150,000 and bars him from serving as an officer or director of any publicly traded company.