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.