The United States Securities and Exchange Commission (SEC) has sought that the assets belonging to the organizer of VERI (Veritaseum) initial coin offering, Reginald “Reggie” Middleton, be frozen. The Commission has accused Middleton for conducting an illegal and fraudulent ICO for the VERI coins worth about 14.8 million dollars in the year 2017 and 2018. As per the recent updates, the temporary restraining order has been attained by the SEC, freezing the defendants’ assets including, accounts at conventional financial institutions, crypto exchanges, and 15 ETH blockchain addresses.
The Commission had filed the emergency action on Monday with the United States District Court for the Eastern District of New York. The documents noted that Middleton also manipulated the value of the securities later on in addition to carrying out fraudulent 2017 ICO.
The complaint has charged Veritaseum and Middleton with infringing the States federal securities laws’ antifraud and registration provisions. Middleton faced additional charges of infringing the provisions concerning with antifraud based on his manipulative trading.
Apart from asking to freeze his assets, the SEC has also asked to prevent Middleton from altering or destroying the documents. They have also demanded a lifelong ban on him operating as an officer or director of any public entity or engaging in digital assets securities offering. They have also asked for disgorgement with interest as well as penalties.
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Middleton, a self-proclaimed “financial guru”, has been accused of not only spreading false particulars about all his businesses but also running trade activities in the market that inflated VERI’s prices. That’s not all. The regulator has also made allegations that a minimum of 520,000 dollars of the investors’ money has been used by Middleton for his personal utilization while 600 thousand dollars were used by him to buy valuable metals to conduct another scam.
The Commission’s complaint highlighted that Middleton failed when it came to registering the VERI ICO with them. Moreover, he claimed that the tokens were investments in his personal label or tech platform; not securities. Middleton went on to describe the tokens as software and prepaid fees a few times. He even compared the tokens with Walmart’s gift cards. The confusion was his attempt to fringe the law, said the SEC.
Continuing further, the SEC stated that Middleton performed a string of manipulative, secret VERI trades that increased its prices artificially by around 315 percent in just a single trading day. He then promoted these hiked prices as well as returns to the holders of VERI.
Marc P. Berger, the Commission’s NY Regional Office’s Director, was quoted as saying,
After learning about Middleton’s transfer of funds, we took quick action to prevent the further dissipation of investor assets.
Whether it’s plain cash or digital currency, they will act to safeguard investors’ assets and go after the manipulations and frauds in their securities markets, Berger added.
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During the infamous 2017 ICO, investors had bought 51 million coins for 69 thousand ether (worth about 14.8 million dollars then) and continued buying based on the misinformation provided by Middleton. He had declared to have successfully sold 35 million dollars’ worth of coins in total for the institutional usage when in reality, there wasn’t any such product.
