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SEC Calls VERI Token ICO a Fraud

The Securities and Exchange Commission is seeking to bar Reginald Middleton from offering digital securities.

The Securities and Exchange Commission announced Friday that it has charged Reginald “Reggie” Middleton and his two enterprises, Veritaseum, Inc. and Veritaseum, LLC, with fraud asserting that he had held an illegal coin offering, was selling unregistered digital securities and was manipulating the value. Out of the nearly $15 million in investor funds Middleton allegedly received, the SEC was able to freeze $8 million.

According to the SEC, Middletown raised $14.8 million from investors between 2017 and 2018 for the VERI token, claiming that VERI was ready to generate million of dollars in revenue. The complaint also states that he increased the trading price of the securities on an unregistered digital asset platform to influence investors to buy more tokens. 

The SEC stated in its complaint that Middleton had misappropriated investor assets from the start of the initial coin offering and that at least $520,000 from the offering went toward undisclosed personal uses. In August 2018, Middleton began buying precious metals with proceeds from the offering to support newer tokens called VeGold, which he also sold to investors. Proceeds from that offering went directly into Middleton’s account located at an online digital trading platform.

 After the SEC discovered Middleton’s alleged fraud and informed his counsel of the pending complaint, Middleton then proceeded to move over $2 million from the offering into a blockchain address that he controlled, according to the complaint.

The SEC asserts in the complaint that Middleton and his entities are violating U.S. federal securities laws surrounding registration and antifraud. The regulator is seeking permanent injunctions and release of the investor funds plus interest and penalties to the SEC. They are also seeking that Middleton be barred from offering securities.

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