The US Securities and Exchange Commission (SEC) has filed an emergency lawsuit to prevent Veritaseum founder Reginald Middleton from spending $8 million of ICO money they claim was fraudulently taken during the ICO in 2017/18. The temporary restraining order freezes multiple bank accounts and Ethereum wallet addresses to prevent movement of the funds that the SEC claims were gained by “making material misrepresentations and omissions about the unregistered securities they offered”.
SEC Doesn’t Hold Back
The SEC didn’t pull any punches in its supporting documentation when it described how the Veritaseum founders “knowingly misled investors about their prior business venture”, touted fictitious demand for the VERI token, had no product ready at the time of the ICO when they said otherwise, manipulated the price of the VERI token, and misappropriated investor funds. They accuse Middleton of skirting securities laws by trying to “refashion” the purpose of the VERI token numerous times to avoid making them look like unlicensed securities, which he appears to have done so unsuccessfully.
— Mike In Space 🚀🚀🚀 (@mikeinspace) August 13, 2019
98% Drop in Token Price
Veritaseum, a peer-to-peer “capital markets as software” service, was one of the unsung heroes of the 2017 bull run, peaking at a $1 billion market cap in January 2018 and a token price of $505 before the bear market really took hold, sending the value crashing down as far as $10 just under a year later. News of the fund freeze had a further negative effect among those crazy enough to still be holding the token after its 98% crash, cutting it down another 67% to $5.65. A ‘show cause’ hearing is slated for August 26 where the SEC will lay out its case against Veritaseum and Middleton, where formal charges are expected to be brought. The SEC is adding more and more crypto cases to its roster, with the action against Kik being another high profile case currently in motion.