The ongoing case between crypto startup, Blockvest LLC and the U.S SEC has taken a new turn according to a notice released today by the securities watchdog.
Judge Gonzalo P. Curiel of the California District Court has handed the U.S SEC a preliminary injunction to file actions against Blockvest LLC, for making fraudulent offers of securities to the U.S SEC.
The new decision marks a reversal on the judge’s earlier decision to deny SEC a preliminary injunction on the basis that they could not prove that Blockvest tokens were a ‘security’ under U.S laws.
The SEC notice cites that the regulators have provided further evidence to show that Blockvest’s token passed the Howey Test while its issuers made misrepresentations of regulatory approval to lure potential investors to its ICO.
As per the court litigation order, Blockvest LLC and its founder, Reginald Buddy Ringgold was found guilty of the following offenses:
Claiming that their ICO has been “registered” and “approved” by the SEC and uses the SEC’s seal on the website under the misrepresentation of Blockchain Exchanges Commission (BEC).
Moreover, it falsely lists BEC’s “office” as the same address as the SEC’s headquarters and used a seal, logo, and mission statement that is nearly identical to the SEC’s seal, logo and mission statement.
They are claiming that their ICO has been approved or endorsed by the Commodity Futures Trading Commission (“CFTC”) and the National Futures Association (“NFA”) by utilizing their logos and seals and stating. But the CFTC and NFA have not approved the ICO.
Falsely asserting they are “partnered” with an “audited by” Big 4 auditor Deloitte Touche Tohmatsu Limited.
It is from these false representations that the court acknowledged that Blockvest and Ringgold violated Section 17(a) [of the Securities Act of 1933] by “selling unregistered securities” and also “obtain money or property using an untrue statement of a material fact.”
With the SEC now holding a litigation order against Blockvest and its founder, the defendants will likely face heavier sanctions from the regulators in the coming weeks.
The SEC had earlier fined Ether Delta’s founder Zachary Coburn roughly $385,000 for selling unregistered securities while celebrities, Mayweather and Dj Khaled were also fined for similar offenses last year.
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