The U.S. Securities and Exchange Commission (SEC) has settled a fraud case with Boon.Tech, a blockchain-powered jobs marketplace and its founder and CEO, Rajesh Pavithran. The SEC had charged the company with fraud and securities violation in connection with its $5 million initial coin offering (ICO).
Boon.Tech conducted its ICO from November 2017 to January 2018, raising $5 million from over 1,500 investors, some of whom were U.S. citizens. It claimed it would channel the funds towards developing a jobs marketplace connecting employers with freelancers. The platform would be powered by blockchain technology and the native Boon Coins.
The SEC alleged that the Boon Coins were sold as investment contracts and therefore qualify as securities. Additionally, the company lied to investors, claiming that Boon Coins were stable and not subject to market volatility as they were hedged with the U.S. dollar. The company also claimed that its platform was faster and more scalable as it was built on its own blockchain protocol. In reality, the platform was built on the same public blockchain as its competitors, the SEC stated.
Boon.Tech and Pavithran agreed on a settlement with the watchdog, consenting to disgorge the $5 million it raised in the ICO. Moreover, without admitting or denying the SEC charges, the company agreed to pay $600,000 in prejudgment interest. Pavithran will also pay a $150,000 penalty and will be barred from serving as director in a public company.
The SEC’s order also requires the company to destroy all the Boon Coins in its possession. It must then contact all digital asset trading platforms that have listed the token and request its delisting. The company has additionally been barred from ever conducting another ICO.
Kristina Littman, the chief of the SEC’s Cyber Unit, cautioned ICO issuers against deceiving investors about the value of their tokens.
She commented, “Investors are entitled to truthful disclosures from issuers of securities, whether digital or otherwise. Pavithran and Boon.Tech defrauded investors by convincing them to fund this endeavor based on the allure of innovation that simply did not exist.”
Boon Tech claimed to be the world’s first decentralized job marketplace that’s powered by artificial intelligence. Its platform would purportedly connect the employers with the freelancers for cryptocurrency rewards, rewarding both with Boon Coins. In March 2018, the company claimed to have partnered with IBM to use its Watson AI algorithms to give the users a better experience.
New to blockchain? Check out CoinGeek’s Blockchain for Beginners section, the ultimate resource guide to learn more about blockchain technology.