Veritaseum ICO issuers facing SEC legal action for alleged fraud, VERI drops 60%

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. “There was no registration statement filed or in effect for the offers and sales of VERI, and no exemption from registration applied,” continued the filing.

Apart from misrepresenting the tokens, Middleton was also accused of fabricating trading volume on an unnamed exchange to artificially pump the price of the tokens. The documents showed that Middleton was able to inflate VERI’s price by 315 percent in a single day.

VERI token plunged nearly 60 percent after the SEC’s scrutinization.

VERI price chart on CoinMarketCap
VERI price chart by CoinMarketCap

Earlier this month, Middleton was asked to voluntarily agree to stop selling and distributing the investor funds that remained with him, but both he and his associates reportedly refused to do so. This, the SEC said, is what ultimately led to the complaint being filed.

While there is still a lot to unfold in the case, the SEC’s accusations will be hard to refute. And judging by the commission’s long-running war against fraudulent and unregistered coin offerings, Middleton is up for one hell of a legal battle.

Veritaseum | VERI

Updated: Aug 13 at 4:46 pm UTC

Veritaseum, currently ranked #198 by market cap, is down 49.94% over the past 24 hours. VERI has a market cap of $16.92M with a 24 hour volume of $1.42M.

Chart by CryptoCompare

Veritaseum is down 49.94% over the past 24 hours.

Posted In: , ICOs, Price Watch, Regulation

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Priyeshu Garg

Priyeshu Garg

Analyst @ CryptoSlate

Priyeshu is a software engineer who is passionate about machine learning and blockchain technology. He holds an engineering degree in computer science engineering and is a passionate economist. He built his first digital marketing startup when he was a teenager, and worked with multiple Fortune 500 companies along with smaller firms. When he is not solving transportation problems at his company (Ola), he can be found writing about the blockchain or roller skating with his friends.

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