SEC Moves To Court Over ‘Fake’ ICO
The agency wants promoters of the ICO barred from taking part in future ICOs.
Court Halt Issuance of ICO As SEC Seeks More Orders
An ICO issuance by an American company claiming to provide the initial regulated and tokenized crypto and index fund has been halted. The ICO rollout was stopped by an American court on the grounds that owners came up with their own regulatory authority.
The development was announced by the SEC on Thursday. The setting up of a regulatory mechanism is believed to have angered authorities in the US. Following the ICO announcement, the SEC moved to court where emergency orders were issued stopping the release by Blockvest.
The matter was presented before a Southern California District Court. The court also barred the already launched pre-ICO sale by the firm. The controversial firm was founded by Reginald Buddy Ringgold. Additionally, SEC managed to get orders freezing asset owned by the defendants.
Data on the ICO’s online platform indicates that Blockvest is backed by ethereum under an ERC20 token. It raises passive income via smart contracts that are shared through assets. The entire ICO is supported by a security token which stands in for the high performing cryptocurrency index.
In the court papers presented by SEC, the regulator accused the ICO promoters of alleging that the fund was approved by relevant authorities. Additionally, the SEC alleged that the firm alongside Ringgold had wrongly linked Blockvest to an accounting company.
The complaint further accuses Ringgold of publicizing the ICO using a non-existence agency dubbed the Blockchain Exchange Commission. He is accused of using seals similar those representing SEC. Additionally, the agency is believed to have listed the same address to that of SEC.
The SEC told the court that the move taken by Ringgold was meant to trick potential investors, something that would have led to a loss of money. The main intention was to make investors believe that the ICO was regulated by the SEC.
According to Robert A. Cohen from SEC, the regulatory agency does not support investments products. He warned investors to be on the lookout over such ICOs.
The court is set to hear the case next week. During the hearing, SEC will ask for additional injunctions on surrender of all gains and penalties. Additionally, they will seek orders barring Ringgold from taking part in any securities offering in the future.