Boon.Tech has been charged by the United States Securities and Exchange Commission (SEC) for conducting an unregistered initial coin offering (ICO) and defrauding investors.
The agency publicized legal action against the project claiming that the project’s Boon Coins were securities while the firm failed to register them as such. The firm is now required to pay a penalty of $600,000 while also giving up the $5 million profit earned through the project.
The US SEC revealed that the Boon.Tech ICO raised around $5 million from investors between November 2018 and January 2019. The firm and its CEO Rajesh Pavithran collected money from more than 1,500 investors residing in the United States and other parts of the world.
The project raised funding by selling Boon Coins in order to develop and advertise a platform that would connect employers posting jobs and freelancers seeking work.
The SEC claims that the project and its lead Pavithran made “misleading statements” regarding the project. These include claims that the Boon Coins were stable and secure since the project used “patent-pending” technology to eliminate the volatility of the digital assets market. As such the Boon Coins can be used as a hedge against the US dollar with a stable price.
However, the agency noted that Boon.Tech did not have any such “patent-pending technology.” The SEC also stated that the Boon Coins were essentially securities while the project did not register them as such.
The project also claimed to have its own mainnet that supported the platform. However, the project was designed on a public blockchain that was already available in the market.
The parties have entered a settlement with Boon.Tech required to a pay a $600,334 penalty while giving up the $5 million profit. Furthermore, the company must destroy all Boon Coins and refrain from participating in any future offerings of digital asset securities.
The project’s CEO Rajesh Pavithran has also been barred from serving as an officer or a director at a public company and needs to pay a penalty of $150,000.