SEC Shuts Down Blockchain Jobs Platform Boon.Tech, Imposes $5.75M Fine

The US top regulator has stepped in to penalize yet another “initial coin offering” (ICO) after its operators failed to register their tokens as a security. The firm, Boon.Tech and its chief executive officer Rajesh Pavithran, is said to have raised close to $5 million following an ICO that began in 2017.

The SEC claims that the offering ran afoul of securities laws because the vehicle being offered could be considered securities, and thus the principles should have registered with the SEC as broker-dealers.

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As part of the settlement, Boon.Tech will disgorge the $5 million raised in the ICO plus prejudgment interest of $600,334. Further, CEO Pavithran was permanently barred from the industry and will also pay a fine of $150,000.

The Boon.Tech project was touted as a blockchain job portal that offers a free platform where employers and freelancers can meet to carry out transactions involving freelance services with cryptocurrency rewards.

Boon Tech’s founder promoted its native token, Boon Dollar, as being a stable coin that does not fluctuate like other cryptocurrencies as it is hedged with US dollar. He also falsely claimed that his company has a patent pending hedging technology incorporated in its platform so that freelancers will know upfront their remuneration in USD before committing to a job.

The US-based recruiting firm has been operating since 2018 and also expanded its presence to the Middle east region with the opening of an international office in Dubai, UAE.

Regulatory status of cryptos remains murky

As explained in the order, the SEC determined that Boon.Tech amounted to selling securities without filing a registration or qualifying for a registration exemption.

The SEC has taken enforcement actions against a dozen companies, putting their offerings on hold after issuing warnings. Further, it has frozen the assets of several cryptocurrency firms, halted ICOs, and suspended trading.

Earlier this year, Hester Peirce, an SEC regulator dubbed “CryptoMom,” has floated the idea of offering a ‘safe harbor’ to ICOs so that some crypto tokens are not treated as securities. Peirce proposed a three-year grace period for cryptocurrency startups to tweak their token-based fundraising models in new directions. As such, crypto tokens meeting specified criteria could be issued more freely before the SEC determine whether they need to comply with the federal securities laws.

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