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US Securities Commission Asks Court to Freeze Assets of NY Firm Due to Alleged ICO Fraud

The US Securities and Exchange Commission (SEC) recently accused a New York businessman of conducting an unregistered and fraudulent initial coin offering (ICO) using two of his companies. Because of this, the SEC has requested the city’s District Court to issue a freeze order on the defendant’s assets. 

The news of the SEC’s court filing was revealed in a post by the Hindenburg Research. 

Formal Complaint Filed

Court documents showed that the Securities Commission formally filed a complaint against entrepreneur Reginald Middleton, Veritaseum Inc., and Veritaseum LLC. The two companies are based in New York and Delaware respectively. 

The SEC claimed the defendants generated about $14.8 million in an initial currency offering from 2017 to 2018 and charges that key information was omitted or misrepresented to investors. The SEC also alleges that there’s still about $8 million in proceeds from investors that remained from the ICO. This has prompted the commission to request a prayer for relief so that the defendant’s assets are frozen.

The SEC has also asked the District Court to issue an order preventing the defendants from meddling with the commission’s access to pertinent documentation, like destroying said documents. The organization is also requested that it be allowed to secure expedited discoveries and place digital assets in escrow using a third party. 

Tokens Dubbed VERI

According to the documents filed, Veritaseum Inc. and Veritaseum LLC sold tokens dubbed VERI. These were reportedly released on the Ethereum blockchain and linked to Ether (ETH) at a ratio of 30:1. 

The defendants were said to have showcased VERI as a utility token and stated that it could be exchanged for benefits like advisory and consulting services. It’s said to also provide the holder with unlimited research access.

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