Rivetz CEO Files Response Rebutting SEC’s Arguments in Ongoing Token Sale Case

News | June 24, 2024 By:

On Tuesday, June 11, 2024, Steven K. Sprague, CEO of Rivetz Corp., filed a response to the Securities and Exchange Commission’s (SEC) notice of supplemental authorities in an ongoing securities case.

The SEC had filed a notice on May 23rd citing a recent case, SEC v. Balina, involving the alleged unregistered sale of securities on a blockchain network. In its filing, the SEC argued the Balina case supported its position that Rivetz Corp’s 2017 sale of “RVT tokens” constituted an unregistered securities offering.

Rivetz and its CEO, Mr. Sprague, have maintained that the sale of RVT tokens was not an investment contract but rather the sale of a software product. In his response filed on Tuesday, Mr. Sprague attempted to rebut the SEC’s arguments that the Balina case established relevant precedents.

Mr. Sprague analyzed the facts of the Balina case and argued they were not comparable or analogous to the Rivetz token sale. He pointed out Balina was a promoter who actively solicited investors on social media, promising high returns, whereas Rivetz made no such statements. Additionally, Balina helped coordinate the token purchase on multiple online platforms, unlike Rivetz.

The CEO also stated the Balina case involved domestic aspects through Balina’s promotional activities on U.S.-based platforms like Google and Telegram. In contrast, Rivetz only conducted the token sale through its offshore entity based in the Cayman Islands and took place entirely on the Ethereum blockchain with no domestic nexus.

Mr. Sprague argued these key factual differences meant the Balina ruling did not support treating the RVT tokens as securities. Specifically, he said Rivetz made no domestic offers or sales that could constitute an investment contract under the Howey test.

Furthermore, the filing asserted Rivetz never promised to create a secondary market for the tokens or touted expected high returns – both factors the Balina court relied on in finding an investment contract. The CEO noted software products can be upgraded over time without becoming securities.

In conclusion, Mr. Sprague said the SEC continues to mislead the court by implying unsupported factual similarities between the cases. He argued the commission has failed to demonstrate the Rivetz token sale met the criteria to qualify as an unregistered securities offering under relevant precedents.

The SEC will now have an opportunity to respond to Mr. Sprague’s arguments in its ongoing legal battle alleging unregistered securities violations by Rivetz Corp. and its affiliated offshore entities. It remains to be seen whether the U.S. District Court in Massachusetts will be persuaded that the Balina ruling indeed provides additional legal support for the commission’s position in this case.

Please contact BlockTribune for access to a copy of this filing.