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Connecticut-Based Company and Former CEO Settle Fraud Charges in Unregistered ICO Case

Sept. 25, 2020

File No. 3-20071

September 25, 2020 - The Securities and Exchange Commission today announced settled fraud charges against Connecticut-based SoluTech, Inc. and its former chief executive officer, Nathan Pitruzzello, in connection with a $2.4 million offering of digital asset securities that included an initial coin offering (ICO).

According to the SEC's order, from at least April 2018 through March 2019, SoluTech and Pitruzzello offered and sold securities in the form of digital assets called SCRL (later renamed XD) to fund the development of a blockchain-based platform called the Scroll Network and additional technology products. The order finds that SoluTech raised approximately $2.4 million from more than 100 investors, including U.S. residents, through this offering. The order finds that SCRL tokens were securities, and that SoluTech and Pitruzzello did not register the offering. Further, the order finds that SoluTech and Pitruzzello made false and misleading statements, including claims that the company had paying clients and was generating revenues, as well as claims regarding the functionality and status of its products. The order also finds that SoluTech and Pitruzzello made misrepresentations regarding investors' interest in investing in SoluTech in connection with SoluTech's and Pitruzzello's attempt to raise funds through a Series A stock offering.

The SEC's order finds that SoluTech and Pitruzzello violated the antifraud and registration provisions of Sections 5(a) and (c), 17(a)(1) and 17(a)(3) of the Securities Act of 1933 and Section 10(b) of the Securities Exchange Act of 1934 and Rule 10b-5 thereunder. Further, the order finds that SoluTech violated Section 17(a)(2) of the Securities Act. Without admitting or denying the SEC's findings, SoluTech and Pitruzzello consented to an order that requires SoluTech to take reasonable steps to destroy all SCRL in its possession, issue requests to remove SCRL from any further trading on third-party digital asset trading platforms, and publish notice of the order on its website. The order also requires Pitruzzello to refrain from participating in any offering of any digital asset security and pay a penalty of $25,000 over a three-year period. In addition, the order finds that the Commission considered SoluTech's decision to self-report the matter and its extensive cooperation with the staff's investigation in determining not to impose a civil penalty.

The SEC's investigation was conducted by Kristen M. Eddy, Nicholas A. Brady, and Timothy Halloran, and was supervised by Jeffrey P. Weiss and Anita B. Bandy.

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