THE Securities and Exchange Commission (SEC) has revoked the registration of New Seataoo Corp. and Seataoo Information Technology OPC and imposed a P1-million fine for unauthorized investment activities.

In a May 10 order, the agency's Enforcement and Investor Protection Department (EIPD) said that Seataoo was soliciting investments from the public without the required license, in violation of the Securities Regulation Code (SRC).

Seataoo, registered as two separate entities, was said to have advertised itself as a cross-border e-commerce platform offering a drop-shipping business model.

However, the SEC said that it was actually a Ponzi-like scheme where investors were promised profits primarily from the efforts of other people.

The EIPD's investigation revealed that the company's operations involved elements of an investment contract, which required prior registration and approval from the commission.

The agency also said it had received numerous complaints against Seataoo since last year for requiring sellers to pay for products upfront, which were then marketed as investments rather than retail transactions.

Despite a show cause order issued on March 22, 2024, Seataoo denied the allegations, claiming that its business operations were legitimate and its sellers were not investors.

The regulator concluded that the money paid by sellers comprised capital investments used in a common enterprise with the expectation of profits derived from Seataoo's efforts.

"Seataoo's activities went beyond the powers conferred by its Articles of Incorporation and involved serious misrepresentation to the great prejudice of the investing public," the SEC said in its order.