Business

Dan Taylor

ICO falsely claiming SEC approval faces lawsuit

The Securities and Exchange Commission (SEC) has won the backing of a U.S. court to halt an initial coin offering (ICO) that has been making wild claims about its regulatory status.

In the latest example of the SEC ramping up efforts against scam coins and ICOs, the commission petitioned a court to secure an emergency order against Blockvest LLC and its founder, Reginald Buddy Ringgold III.

The order concerns pre-ICO sales being promoted by the firm, which had been found to be claiming registered status and approval from the SEC—claims which were in fact untrue. This allegedly also included the use of SEC graphics and logos, ostensibly to convince investors on a false prospectus.

In a statement, the regulator said using the SEC seal without permission is in itself a violation of federal law.

“Blockvest and Ringgold, who also goes by the name Rasool Abdul Rahim El, were using the SEC seal without permission, a violation of federal law, and falsely claiming their crypto fund was ‘licensed and regulated,’” according to the SEC.

The SEC complaint also claimed Ringgold promoted the ICO with a fake agency he created called the “Blockchain Exchange Commission,” using a graphic similar to the SEC’s seal and the same address as SEC headquarters.”

In response, a district court in California issued the order, which grants the SEC the powers to freeze company assets, while making several other provisions for emergency relief.

Robert A. Cohen of the SEC’s Enforcement Division Cyber Unit said, “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…The SEC does not endorse investment products and investors should be highly skeptical of any claims suggesting otherwise.”

The case is the latest example of the SEC clamping down on misleading and fraudulent ICOs, with several similar enforcement actions initiating and concluding in recent weeks. With regulators now increasingly determined to tackle this dubious corner of the crypto sector, it looks like time is running out for promoters of dodgy ICOs.

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