Although the heydays of the initial coin offering are now in the rearview mirror, the US Securities and Exchange Commission continues regulatory action against those accused of conducting ICO’s in violation of the securities laws.  On September 8, 2021, the SEC charged Rivetz Corp., Rivetz International SEZC, and Steven K. Sprague, the head of both companies, with conducting an illegal, unregistered offering of securities through an ICO.

According to the SEC’s complaint, between July and September 2017, the defendants offered and sold digital assets designated as “RvT tokens” to the general public, including U.S. investors, for the purpose of capitalizing Rivetz’s business. The complaint alleges that Sprague marketed RvT as an investment opportunity by promoting the value of RvT to investors; highlighting that RvT would be made available to trade on digital asset trading platforms; describing where RvT could be resold; touting Sprague’s abilities and managerial skills, including his experience as a former officer and director of a public company; and claiming RvT would increase in value as a result of Rivetz’s efforts. According to the complaint, the RvT tokens could not be used to purchase any good or service at the time they were sold.  These allegations are obviously intended to satisfy the Howey test for establishing that the RvT token offering was an offer and sale of “securities” as defined by Section 2(a)(1) of the Securities Act.

The complaint further also alleges as follows:  Defendants raised approximately $18 million worth of Ether in the offering. Approximately 7,200 investors purchased RvT tokens, including 2,160 investors in the United States. Following the completion of the offering, Rivetz and Sprague caused Rivetz Int’l to liquidate the Ether received from token purchasers, and all of the Ether was either spent or sold for U.S. dollars by March 2018.  Over the next year, Rivetz Int’l transferred the resulting cash to Rivetz, and Rivetz then used the cash to, among other things, fund its ongoing operations, give Sprague a $1 million one-time bonus, and loan Sprague $2.5 million, which he used to purchase a house in the Cayman Islands.

The SEC seeks injunctive relief, the return of allegedly ill-gotten gains plus prejudgment interest, and a civil penalty.


David Zaslowsky has a degree in computer science and, before going to Yale Law School, was a computer programmer. His practice focuses on international litigation and arbitration. He has been involved in cases in trial and appellate courts across the United States and before arbitral institutions around the world. Many of David’s cases, including some patent cases, have related to technology. David has been included in Chambers for his expertise in international arbitration. He is the editor of the firm's blockchain blog.