SoluTech, a defunct blockchain firm whose initial coin offering (ICO) raised $2.4 million, has settled fraud and securities violations charges with the U.S Securities and Exchange Commission (SEC).
The SEC slapped SoluTech and its co-founder, 24-year-old Nathan Pitruzzello with fines and a cease-and-desist order for conducting its unregistered 2018-2019 ICO of the SCRL token in an administrative filing published Friday.
- The order described how SCRL would "eventually be usable" with SoluTech's "blockchain data management solution" mainnet called Scroll Network (SoluTech folded in October 2019.).
- But SCRL was an unregistered security, the regulator ruled, as SCRL's 100 investors had a "reasonable expectation" of profiting from the SoluTech's efforts – a critical prong of the Howey Test.
- Additionally, Pitruzzello "recklessly misrepresented" his fintech's history of revenue generation and existing client base to boost investments in his ICO, the order said. The SEC determined SCRL's sale therefore constituted a fraud.
- Under the terms of the settlement, Pitruzzello promised the SEC to never again host a digital asset security offering, though he will be allowed to buy and sell on his own behalf. He also must pay a $25,000 fine.
- SoluTech pledged to destroy its SCRL in 30 days or less and work to block further trading on secondary markets within the next 10 days.
The leader in news and information on cryptocurrency, digital assets and the future of money, CoinDesk is a media outlet that strives for the highest journalistic standards and abides by a strict set of editorial policies. CoinDesk is an independent operating subsidiary of Digital Currency Group, which invests in cryptocurrencies and blockchain startups.