In Response To SEC Request - US Court Temporarily Freezes $8M ICO Fund
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In response to a request filed by the U.S Security and Exchange Commission on Aug. 12, a United States District Court has entered an emergency freeze to preserve $8 million of a New York citizen and two of his entities related assets.
Announced in a publication by the SEC on Aug. 13, the court agreed, ordering the temporary freeze of $8 million of the $14.8 million Reginald “Reggie” Middleton and two entities under his management, Veritaseum, Inc. and Veritaseum, LLC raised in 2017 and 2018 by conducting a fraudulent and unregistered initial coin offering (ICO). The SEC specifically alleges the defendants of violating the registration and antifraud provisions of the U.S. federal securities laws, as well as manipulative trading.
As per the SEC filling on Aug. 12, the companies sold tokens called VERI, which were apparently issued on the Ethereum blockchain and pegged to Ether (ETH) at a 30:1 ratio. The defendants reportedly presented VERI as a utility token, saying that it could be redeemed for benefits such as consulting and advisory services and purportedly unlimited access to research.
The SEC thus seeks the defendants to pay permanent injunctions, disgorgement, interest, and penalties and a bar from offering digital securities. Marc P. Berger, director of the SEC’s New York Regional Office, said:
“After learning about Middleton’s transfer of funds, we took quick action to prevent the further dissipation of investor assets. Whether in digital currency or plain cash, we will act to protect investor assets and to pursue fraud and manipulation in our securities markets.”