US SEC Scores Significant Victory Over Rivetz, Continues Broader Legal Battles in the Crypto Space

The U.S. Securities and Exchange Commission (SEC), led by its Chair, Gary Gensler, has maintained a tough stance on crypto regulation.

The U.S. Securities and Exchange Commission (SEC) has scored a significant victory in its legal battle against Rivetz, a now-defunct mobile crypto wallet company.

According to a recent court filing, U.S. District Judge Mark Mastroianni has granted the SEC's motion for summary judgment in the case. This means that the court has ruled on the matter based on the evidence presented, without proceeding to a trial.

The SEC filed a legal action against Rivetz in 2021, alleging that the firm sold $18 million in unregistered securities during an Initial Coin Offering (ICO) in 2017, thus violating the Securities Act.

Specifically, the regulator cited Sections 5(a) and 5(c) of the Securities Act 1933 in its complaint.

The SEC maintained in its filing that Rivetz's CEO personally promoted the ICO within the United States without filing a prior registration statement, which is a violation of the Securities Act.

As per the court's ruling, Rivetz CEO Steven Sprague now has until October 22 to submit a proposed judgment for 'injunctive and monetary relief.' Additionally, Judge Mastroianni ruled that Sprague may file objections to the judgment no later than November 5, 2024.

The SEC alleged that a portion of the ICO proceeds were misused, with the founder receiving $1 million as a bonus and an additional $2.5 million loan to purchase property in the Cayman Islands.

Despite offering advanced blockchain security solutions for mobile devices integrated with cryptocurrency wallets, Rivetz struggled to gain significant traction in the crypto market.

The ruling in the SEC's case against Rivetz is part of the broader legal efforts by the regulatory body against various crypto entities.

For example, the SEC has been engaged in a four-year legal battle against Ripple, initially seeking a $2 billion fine for allegedly violating federal securities laws. The SEC claimed that Ripple sold XRP directly to institutional clients.

However, in a significant development, Federal Judge Analisa Torres ruled that Ripple should only pay $125 million in fines with an injunction against future violations.

Although the fine is more than 12 times the amount ($10 million) Ripple argued for, it is considerably smaller than the SEC's $2 billion proposal, which many view as a major win for Ripple in its case against the SEC.

Moreover, crypto exchanges Binance and Coinbase have also faced legal challenges from the SEC.

In 2023, the regulatory body sued Binance Holdings Limited and its founder, Changpeng ‘CZ’ Zhao, for operating as an unlicensed securities exchange in the U.S.

The SEC also brought an enforcement action against Coinbase, alleging that the firm acted as an unregistered broker. In its defense, the exchange argued that the SEC has been inconsistent and lacked transparency in its actions related to cryptocurrency.

As the race to the White House intensifies, both the Republican and Democratic parties have attempted to appeal to voters within the crypto community, with political analysts suggesting that cryptocurrency could play a pivotal role in the November election.

Unsurprisingly, SEC Chair Gary Gensler has faced scrutiny from lawmakers in Congress recently.

Wyoming Senator Cynthia Lummis, a known advocate for digital assets, has openly criticized Gensler, accusing him of stifling innovation and failing to provide clear, proactive guidance in the SEC's regulatory oversight of the crypto space.

According to industry experts, the intense focus on Gensler may促使the SEC to adopt a softer approach to avoid further antagonizing the crypto ecosystem. The outcomes of the pending cases between the SEC and the various crypto entities remain to be seen.

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