Recently, a court in the United States has put a stop to an initial coin offering (ICO) by a company that claims to offer “the first licensed and regulation tokenized cryptocurrency exchange & index fund based in the US.” They also went on to create their own regulatory authority, which seemed to really provoke the regulators.
This past Thursday (October 11th), the Securities and Exchange Commission (SEC) announced that it has obtained an emergency court order halting a planned ICO by Blockvest. The Southern California District Court also stopped an ongoing pre-ICO sale by the company and its founder, Reginald Buddy Ringgold. It also went on to freeze the defendants’ assets.
As stated in the ICO’s website, Blockvest (BLV) is an ERC20 token based on Ethereum. “Blockvest Nvestnodes generate passive income through asset-backed profit sharing smart contacts. At its core, BLV is a security token that’s representative of the top performing cryptocurrency index.”
According to the SEC’s complaint, Blockvest and Ringgold, who also goes by the name Rasool Abdul Rahim EL, were falsely claiming their crypto fund was “licensed and regulated.” In addition to that, Blockvest and Ringgold have allegedly misrepresented Blockvest’s connections to an accounting firm.
The complaint by the SEC also alleges Ringgold promoted the ICO with a fake agency he invented called the “Blockchain Exchange Commission,” using a graphic similar to the SEC’s seal and the same address as SEC headquarters.
“We allege that this ICO is using both the SEC seal and a made-up crypto regulatory authority to trick investors into believing the ICO was approved by regulators,” said Robert A. Cohen, Chief of the SEC Enforcement Division’s Cyber Unit.
“The SEC does not endorse investment products and investors should be highly skeptical of any claims suggesting otherwise.”
The next court hearing is set for on the 18th of October, 2018. On that day, the SEC will ask for injunctions, the return of ill-gotten gains plus interest and penalties, in addition to a ban against Ringgold from participating in offering any securities in the future.