The founder and main face of the Veritaseum project, Reginald or Reggie Middleton has been charged with fraud by the US Securities and Exchange Commission (SEC) a couple of weeks ago. The regulator asserted that the individual manipulated the market and the public when offering on sale the Veritaseum token (VERI).
While the project raised close to $15 million, the court only managed to freeze $8 million of the assets held by the associated companies and Middleton. The news positively affected the price of the token on the open market as it is currently trading at $10.32, which is higher by 40 percent on the day.
According to the court filing, the freeze encompasses not only corporate, personal and brokerage bank accounts of the company but also several Ethereum and Bitcoin addresses and funds held at cryptocurrency exchanges. Middleton’s large expose arguing against the SEC’s rationale appears to have been ignored in court.
The move shows the far-reaching arm of the US legislative body when it comes to blockchain holdings. The inclusion of certain specific BTC and ETH addresses is tantamount to a full asset freeze. Aside from US banks, Middleton also used one in Mauritius and three in Nigeria. His accounts at Interactive Brokers, Coinbase, Gemini, and Kraken have also been frozen.
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The assets have been completely frozen about 2 weeks after the initial press release by the SEC which detailed the S financial regulator at the time, the defendant engaged in marketing and the sale of the tokens called “VERI” in a misleading way, leading to significant losses on part of retail investors.
According to the SEC, Veritaseum’s founder knowingly misled investors about his prior business ventures. He also allegedly disseminated information that there is investor demand for VERI while claiming that the company has a revenue-generating product which never existed in practice.
According to the complaint from the SEC, Middleton also manipulated the price of the VERI tokens by using an unregistered digital assets trading platform. He proceeded to move a significant portion of the funds committed by investors in the project to his own personal accounts.
The SEC took steps to limit further actions on the part of Middleton by securing the freeze from the District Court of New York. According to the US regulator’s complaint, Middleton and Veritaseum violated securities laws and didn’t have antifraud provisions.
The case is progressing with Middleton also allegedly violating the antifraud provisions on the basis of his manipulative trading. According to the SEC’s complaint, he is facing permanent injunctions, disgorgement of the investor funds together with interest and penalties. He is also likely to be barred from offering digital securities.