The U.S. Securities and Exchange Commission (SEC) announced on Thursday that it had obtained an emergency court order to halt an initial coin offering (ICO) that fraudulently claimed to have SEC approval.
According to the complaint, which was filed under seal on Oct. 3, Blockvest LLC and its founder -- Reginald Buddy Ringgold, III, aka Rasool Abdul Rahim El -- told prospective ICO investors that the company had “registered” with the SEC and had been “approved” by the agency, along with other regulators. That, along with other claims that Blockvest made, was not true.
From the complaint:
“Blockvest and Ringgold claim their ICO has been ‘registered’ and ‘approved’ by the SEC and other regulators, even going so far as to use the SEC's seal to promote their offering. None of that is true: the SEC has in no way approved, authorized or otherwise endorsed defendants, their entities, nor their ICO. Defendants also claim they are "partnered" with and "audited by" Deloitte Touche Tohmatsu Limited ("Deloitte")-which they are not.”
In a bizarre move to keep up the charade, Ringgold created a fictitious regulatory agency, the “Blockchain Exchange Commission,” whose logo closely mirrored that of the SEC and linked to the government agency’s official website.
"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."
Had the SEC not obtained the court order halting the Blockvest ICO, the agency said that Ringgold would have made a scheduled appearance at an ICO conference in Los Angeles at which he would likely have continued to market his cryptocurrency token through fraudulent means.
Notably, the SEC's action against Blockvest comes shortly after the Commodity Futures Trading Commission (CFTC) filed charges against a fraudulent cryptocurrency investment scheme whose operators impersonated CFTC regulators and forged documents to grift bitcoin from retail investors.
Read the full complaint below:
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Last modified (UTC): October 11, 2018 6:33 PM