The Securities and Exchange Commission (SEC) is ramping up its efforts to combat crypto fraud. The Commission filed an emergency legal action against the owner of Veritaseum, Reggie Middleton, whose ICO raised almost $15 million—obliterating the price of VERI.
Combating fraudulent ICOs
The SEC is ramping up actions against unscrupulous ICOs. Although the Commission has been attempting to combat fraud and manipulation in the crypto industry attentively for the last five years, only recently have controversial enforcement actions been issued.
The latest example of the SEC tightening its regulatory grip is the legal complaint filed with the U.S. District Court for the Eastern District of New York.
According to court documents shared by the Hindenburg Research, the complaint was filed against Reginald Middleton, a New York resident accused of conducting an unregistered token sale. The SEC claims that Veritaseum Inc. and Veritaseum LLC—two companies controlled by Middleton—raised $14.8 million through the sale of 51 million VERI tokens between late 2017 and 2018.
The regulator called for an emergency stop action to prevent Middleton, a self-proclaimed “financial guru,” from accessing the funds that remained from the VERI coin offering. Court documents showed that Middleton currently has access to around $8 million of investor funds.
VERI coin issuer facing fraud charges
Middleton and his companies made “material misrepresentations and omissions about the unregistered securities” his companies offered and “knowingly misled investors about their prior business venture,” the court documents asserted.
The base of SEC’s case lies in the fact that Middleton reportedly tried to pass off VERI tokens as “software,” even going as far as calling them “gift cards.” All of this, the commission claims, makes the entire offering illegal.