Court Allows SEC to Freeze $8 Million Assets From Veritaseum ICO

Wilfred Michael 

Wilfred Michael

News reporter

14 August 2019,
05:55
Court Allows SEC to Freeze $8 Million Assets From Veritaseum ICO

A District Court in the United States has granted a request by the Securities and Exchanges Commission (SEC) to freeze $8 million worth of assets belonging to Reginald “Reggie” Middleton and two companies he owns, Veritaseum, Inc. and Veritaseum, LLC.

The SEC had alleged as part of its court request that Middleton, who is from New York, used the two companies to carry out a fake ICO between 2017 and 2018. The founder sold crypto-tokens called VERI which was likely issued on the Ethereum  blockchain and pegged to Ether (ETH) at a ratio of 30:1 

VERI tokens as per its ICO promise was supposed to give investors access to consulting and advisory services, as well as unlimited access to research materials. However, the SEC alleged that the offering violated both the country's 'security' registration laws, antifraud provisions, while at the same time exhibiting traits of manipulative trading.

As punishment for breaching these laws, the regulator wants Middleton and his affiliated companies to pay permanent injunctions, disgorgement, interest, and penalties, as well as come under a ban from offering digital securities.

Meanwhile, the $8 million currently under freeze by the SEC represents over half of the $14.8 million which the defendants raised from its sale of alleged security tokens on an unregulated trading platform.

The move according to Marc P. Berger, Director of the SEC’s New York Regional Office will prevent the further dissipation of investor assets by Middleton. It is also an "act to protect investor assets and to pursue fraud and manipulation in our securities markets," the official said in the release.

In a similar development, Stmarket.co reported that the SEC filed a lawsuit against Canada-based messaging platform KIK, alleging that the startup violated securities law when it raised $100 million in a 2017 ICO.

 

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