SEC Halts Fraudulent ICO that Claimed Regulatory Approval
10/17/2018On Oct 11, 2018, the Securities and Exchange Commission (SEC) announced that it halted a planned initial coin offering (ICO) and related pre-ICO sales by Blockvest LLC and its founder, Reginald Buddy Ringgold, III. In seeking an emergency court order, the SEC alleged that Blockvest had falsely claimed that it and its affiliates received regulatory approval from various agencies, including the SEC and a fake agency called the “Blockchain Exchange Commission.” Blockvest and Ringgold also allegedly used the National Futures Association (NFA) seal in making false claims about their regulated status, even after the NFA sent them a cease-and-desist letter for doing so.
The SEC also charged that Blockvest and Ringgold violated the antifraud and securities registration provisions of the federal securities law. The SEC sought injunctions, return of ill-gotten gains plus interest and penalties, and a bar against Ringgold participating in any future offering of securities. A hearing is scheduled for Oct 18, 2018 in the U.S. District Court for the Southern District of California, where the Court will consider whether to continue the asset freeze and the issuance of a preliminary injunction.
The Chief of the SEC Enforcement Division’s Cyber Unit, Robert A. Cohen, said that “the SEC does not endorse investment products and investors should be highly skeptical of any claims suggesting otherwise.” In addition, the SEC's Office of Investor Education and Advocacy and the U.S. Commodity Futures Trading Commission's (CFTC) Office of Customer Education and Outreach jointly issued an investor alert on the use of false claims regarding SEC and CFTC endorsements.
We will continue to monitor developments in this case as well as any additional fraudulent ICO crackdowns.