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SEC Files Lawsuit Against Veritaseum (VERI) Founder

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Veritaseum

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The SEC has filed an emergency lawsuit against Veritaseum (VERI) and its founder Reginald Middleton with the New York Eastern District Court. The action aims to prevent Mr. Middleton from spending $8 million USD raised by the company in an ICO.

“Knowingly Misled” VERI Investors

The SEC alleges that Mr. Middleton “knowingly misled” investors about prior business success in order to increase investor demand for VERI tokens. The SEC also claims that Veritaseum made manipulative trades to increase the value of VERI tokens. The value of Veritaseum, the world’s 15th largest cryptocurrency, has fallen nearly 45% in the aftermath of the news.

This emergency action seeks to prevent Mr. Middleton from dissipating $8 million USD, which remains from approximately $14 million USD that was allegedly defrauded from investors between 2017 and early 2018. The news comes just one day after CipherTrace, a leading cryptosecurity company, reported that crypto criminals had taken an astounding $4.3 billion USD in 2019 alone.

A Series of Secret Trades

Mr. Middleton had falsely claimed that Veritaseum had products ready to go in order to drive investor interest, as well as placing a series of secret trades after the ICO, which artificially bumped VERI’s price by more than 300% in just one day of trading. Mr. Middleton also misappropriated $520,000 of funds raised during the ICO for his own personal use.

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According to the SEC, Mr. Middleton attempted to avoid SEC registration requirements by claiming VERI tokens to be “pre-paid fees,” “software,” or “gift cards.” The SEC initially told the defendant’s lawyers they were likely to recommend filing of an enforcement action. However, after this the defendant “moved more than $2 million in remaining offering proceeds from a blockchain address they controlled into other addresses, and used a portion of those funds to purchase more precious metals.” When asked not to spend any more of the allegedly fraudulent funds, the defendant refused.

The SEC is now seeking an order to freeze the defendant’s assets in order to prevent the dissipation of any more funds.

Featured image: DepositPhotos © gunnar3000

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Veritaseum CEO in Pretrial Settlement Talks with SEC

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Veritaseum

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Veritaseum founder and CEO Reg Middleton is in talks with the US Securities and Exchange Commission to reach a settlement on claims that the VERI initial coin offering (ICO) misled investors with regard to the token’s potential value.

Veritaseum “Knowingly Misled” Investors

Back in August, the SEC filed an emergency lawsuit against Veritaseum and its founder in order to prevent him from spending $8 million USD raised by the company in an ICO. The SEC alleges that Middleton “knowingly misled” investors about prior business success in order to increase investor demand for VERI tokens and that Veritaseum made manipulative trades to increase the value of VERI tokens. The company raised approximately $14.8 million USD in an ICO held between April 25 and May 27, 2017.

“The parties have been engaged in settlement discussions. In order to permit the parties to devote their resources to settlement, the parties jointly request that the Court set the scheduling conference for no earlier than November 11, 2019. This is the first request for an extension of the scheduling conference,” the SEC said today. Middleton has argued that Veritaseum’s coin is not a security, but rather a form of “pre-paid fee” or “software” in an attempt to circumvent the commission’s regulations.

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Post ICO Manipulation

Middleton had previously falsely claimed that Veritaseum had products ready to go in order to drive interest in the ICO, as well as placing a series of highly suspicious secret trades after the offering, which artificially bumped VERI’s price by 300% in just one day, placing it in the world’s top ten cryptocurrencies at one point. He also allegedly misappropriated $520,000 USD of investors money for personal use.

In 2017, Veritaseum claimed to have lost 36,000, or $8 million USD worth of, VERI tokens in a hack. The tokens were dumped within a few hours, and the funds, the source of the hack, remain a mystery over two years later. The case will go to a pretrial conference on November 11 if no settlement is reached.

Featured Image: DepositPhotos © belchonock

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