Securities and Exchange Commission v. Reginald Middleton et al., “Final Judgment” (S.D.N.Y, 19 Civ. 4625, 11/1/19) [SDP]
Less than three months after getting sued by the Securities and Exchange Commission, erstwhile self-described quadrillion dollar crypto ICO issuer Veritaseum a/k/a “the market of all the money” has entered into a consent judgment that shuts it down and transfers assets to the SEC for distribution to a receiver. With sincere apologies to T.S. Eliot fans everywhere, this is the way the quadrillion dollar market of all the money apparently ends, not with a bang but a whimper.
As reported on August 13, the SEC sued Veritaseum and Reggie Middleton and again on August 24 for alleged securities fraud after spending approximately $8 million from an ICO undertaken in 2017 and 2018. What really frosted the regulators giblets is that when SEC staff — in the middle of an open investigation — told the defendants not to spend the money they went ahead and spent $2 million anyway to buy “precious metals”. This was a really bad idea, apparently, and led to an immediate lawsuit seeking an asset freeze.
Per the original SEC lawsuit, so-called VERI tokens were plainly unregistered securities and claims about their functionality were plainly horse puckey.
A proposed final judgment, consented to by the defendants, was filed by the SEC on October 31, 2019. The judgment was signed by the Court the next day, on November 1. The judgment contains a permanent injunction against the defendants to not violate securities laws again (I mean you’re already not supposed to), a permanent bar on selling digital securities (a bit more teeth), collection of $9.4 million from the defendants, and establishment of a fund with that money “so that the victims of Defendants’ fraud may be compensated.”
The order provides that “Defendants are jointly and severally liable for disgorgement of $7,891,600,