September 28, 2020 | AtoZ Markets – The now-defunct blockchain project, SoluTech has settled charges of fraud and security law violations with the U.S. Securities and Exchange Commission (SEC) according to a court filing published Friday.
SoluTech’s tokens fall under the category of securities
Per the official filing, the Connecticut-headquartered company illegally offered and sold digital asset securities named SCRL. These sales were used to fund the development of a blockchain-based platform called the Scroll Network, as well as several other products. The U.S. regulator alleged that the company’s tokens fall under the category of securities based on the Howey test. Nevertheless, it did not obtain any approvals from the SEC for selling them.
In addition, the firm was involved in fraudulent misrepresentations from April 2018 through March 2019. SoluTech and its co-founder Nathan Pitruzzello raised $2.4 million in its initial coin offering (ICO) from over 100 investors, some of whom included U.S. residents.
Pitruzzello was also accused of “recklessly” misrepresenting the company’s revenue and the capabilities and development process of the products.
SoluTech settles fraud charges with SEC
Without admitting or denying these findings, SoluTech and Pitruzzello have decided to settled with SEC.
Under the settlement, Pitruzzello can never host a digital token security offering, but will still be allowed to buy and sell assets for himself. The blockchain company was additionally ordered to destroy all its tokens within the next 30 days and will block its trading on the secondary market in 10 days. He also will have to pay $25,000 in civil penalties.
The US watchdog has continued to crack down on many crypto companies for allegedly conducting illegal ICOs. Crypto regulations in most countries are still in a grey area. Many countries around the world have reported an increase in cryptocurrency scams this year despite the ongoing covid-19 pandemic. The surge in the crypto-related fraud has raised concerns among the regulators across countries.
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