The Veritaseum blockchain system and its founder Reggie Middleton have submitted a reaction to the U.S. Securities and Exchange Commission (SEC) above the regulator’s claim that its ICO was fraudulent and illegal, and that Middleton had afterwards manipulated the VERI token’s price.
As a result, the SEC managed to get a New York court docket previous 7 days to temporarily freeze the belongings of the task – which describes by itself as a “gateway to peer-to-peer cash markets” – pending more discovery in the scenario.
Middleton stands accused by the SEC of spreading untrue info about his organizations,and conducting trades in the open up market that hiked the selling price of the VERI token. The SEC more alleged he misappropriated above $520,000 of trader cash for his individual use, as properly as $600,000 to invest in cherished metals to fund another alleged fraud.
The founder had failed to sign-up the ICO with the SEC, the commission stated. The SEC also disagreed with Middleton’s claim the tokens were being not securities.
Veritaseum’s lengthy, 423 page reaction sets out its argument that the task had in truth issued “utility tokens,” not securities, that were being to provide holders with obtain to research reviews and afterwards obtain to its “software system.”
The document states:
“The tokens are not investments and are not securities. They do not characterize an possession desire in Veritaseum or its belongings do not give holders any right to share in the company’s earnings do not confer voting rights and do not pay back dividends or desire. Various token holders have applied their tokens to avail by themselves of the Veritaseum’s exclusive products and products and services, which the company has continually expanded and improved.”
The SEC had also justified the belongings freeze on the claim that Middleton had started transferring above $2 million-worth of investors’ ether cash to “other digital asset addresses,” and his individual account soon right after the company had informed Middleton’s attorneys of the coming enforcement action.
The firm’s reaction hits again at this claim, saying that its authorized group had already “demonstrated” to the SEC that the asset transfer was “routine funding of Veritaseum’s ongoing lawful business enterprise functions and was consistent with the company’s prior funding tactics.”
“The SEC did not disclose this info to the Court in its asset freeze software and improperly represented to the Court that Mr. Middleton had transferred a part of the belongings to a individual account. In truth, all of the belongings remained in the company’s manage,” according to Veritaseum.
The firm more established out that the belongings freeze goes against the really intent of the SEC and is harming traders.
The firm called for the court docket to “lift the freeze in its entirety,” continuing:
“The 2nd Circuit has instructed district courts to give cautious notice the place an SEC asset freeze might financially wipe out a defendant’s company and thereby thwart the objective of guarding traders. … The momentary freeze in this scenario has already caused major damage to the holders of Veritaseum’s utility tokens, the really people today the SEC is purportedly trying to find to protect.
It more statements that the SEC supplied “no evidence that Middleton has dissipated or concealed company belongings or is very likely to do so in the foreseeable future.”
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