SEC cracks down on false claims for blockchain offering
12 Oct 2018
The Securities and Exchange Commission (SEC) has taken steps via an emergency court order to halt a planned initial coin offering (ICO) by a company called Blockvest, which backers falsely claimed was approved by the US regulator
12 Oct 2018
The SEC alleges that Blockvest falsely claimed its ICO and its affiliates received regulatory approval from various agencies, including the SEC. The company and it founder, Reginald Buddy Ringgold, who also goes by the name Rasool Abdul Rahim El, were using the SEC seal without permission, a violation of federal law, and falsely claiming their crypto fund was ‘licensed and regulated’.
The complaint also alleges Ringgold promoted the ICO with a fake agency he created called the ‘Blockchain Exchange Commission’, using a graphic similar to the SEC's seal and the same address as SEC headquarters.
Blockvest and Ringgold also allegedly misrepresented Blockvest's connections to a well-known accounting firm, and continued their fraudulent conduct even after the National Futures Association (NFA) sent them a cease-and-desist letter to stop them from using the NFA's seal and from making false claims about their status with that organisation.
A court has now issued an order freezing defendants' assets and there is to be a hearing next week to consider continuing the asset freeze and issuance of a preliminary injunction.
Robert Cohen, chief of the SEC enforcement division's cyber unit, said: ‘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.
‘The SEC does not endorse investment products and investors should be highly sceptical of any claims suggesting otherwise.’
The SEC's complaint charges Blockvest and Ringgold with violating the antifraud and securities registration provisions of the federal securities laws. The complaint seeks injunctions, return of ill-gotten gains plus interest and penalties, and a bar against Ringgold to prohibit him from participating in offering any securities, including digital securities, in the future or making misrepresentations about regulatory approval.
Report by Pat Sweet