SEC Freezes $8 Million in Assets from Allegedly Fraudulent VERI Token ICO

SEC Freezes $8 Million in Assets from Allegedly Fraudulent VERI Token ICO

On August 12th 2019, the U.S. Securities and Exchange Commission (SEC) was granted a court order to temporarily freeze $8 million worth of assets related to Veritaseum and the VERI token offering. The SEC says the company, along with its operator Reginald “Reggie” Middleton, fraudulently offered and sold up to $14.8 million worth of digital securities.

The SEC vs. VERI Token and Reginald Middleton Explained

The SEC has filed charges against Reginald Middleton, a self-proclaimed ‘financial guru’, and two entities he controls— Veritaseum Inc. and Veritaseum LLC.

The charges, which were filed in a federal court located in Brooklyn, New York, claim that the defendants committed fraud when selling digital tokens dubbed ‘VERI’ tokens.

According to the SEC, the defendants manipulated retail investors to invest in VERI tokens based on misrepresentations and omissions. Middleton and Veritaseum misled investors about their prior business, lied about investor demand for VERI, falsely claimed to have a revenue generating product developed when none such existed, and even manipulated the price of VERI through an unregistered digital asset trading platform.

Recently, Middleton transferred a significant amount of investor assets and dissipated a portion of those assets, transferring them to his personal account.

At that time, the SEC stepped in and was granted an emergency freeze to preserve at least $8 million of the nearly $15 million raised by the defendants in their digital securities offering which took place in 2017 and 2018.

According to Marc P. Berger, Director of the SEC’s New York Regional Office,

“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.”

Ultimately, the SEC’s complaint charges Middleton and Veritaseum with violating registration and antifraud provisions. The charges seek permanent injunctions, disgorgement plus interest and penalties, and the prohibition from offering digital securities in the future.

The SEC has demonstrated increasing activity in the digital asset space. In addition to offerings, the commission has filed charges related to cryptocurrency exchanges and launched investigations related to investment advisors and even custody solutions.

What do you think about the SEC freezing $8 million worth of assets based on alleged fraud surrounding the VERI token? Let us know what you think in the comments section below.

Image courtesy of the SEC.

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