Blockvest won a small victory in court on what would appear to be a legal technicality, granting some reprieve in its ongoing SEC fraud case.
The project was sued by an elderly couple, Tommy and Christine Garrison, who had lost money in its initial coin offering (ICO), and centers on allegations of securities law violations. The project is also accused of engaging in unlawful business conduct and financial elder abuse.
The plaintiffs filed the action against both Master Investment Group and Rosegold Investments, the two firms behind the Blockvest project. Founder and managing director of both firms, Reginald Buddy Ringgold, III, also known as Rasool Abdul Rahim El, was also cited.
In response, Ringgold filed a response on his own behalf, but both companies failed to respond to the citation. As a result, the companies were put in default liability, because the action was unopposed.
Earlier this week, the court vacated the default judgement, on the grounds that the companies were closely related. Blockvest will still be required to defend itself eventually, but the ruling brings some temporary relief for the defendant.
In a further twist, Blockvest was recently accused by the SEC of falsifying material evidence in the case, with a petition to the court for default judgement due to sanctions still pending.
In both actions, Blockvest is accused of violations of securities law. As a result, it’s expected a loss in one case would likely mean a loss in both, which could spell serious trouble for the project and the companies behind it.
The Blockvest ICO raised $2.5 million in its pre-launch phase before the Securities and Exchange Commission (SEC) intervened, alleging the breaches of securities laws.
The case serves as the latest reminder to investors to be wary of initial coin offerings. According to the SEC, ICOs are likely to be securities, and therefore can only be issued by authorization of the regulator.
However, a large number of cases of investors losing money in ICOs have emerged, with many offerings even deemed to be fraudulent.
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