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The Veritaseum blockchain platform and its founder, Reggie Middleton, filed a response with the US Securities and Exchange Commission (SEC) regarding the regulator's claim that its ICO was fraudulent and illegal, and that Middleton later manipulated the value of the VERI token.
As a result, the SEC managed to call a New York court last week to temporarily freeze the project's assets, which describes itself as a "gateway to the peer-to-peer financial markets," in the meantime from a new discovery.
Middleton is accused by the SEC of spreading false information about its businesses and having made open market transactions that have pushed up the price of the VERI token. The SEC further alleged that it had embezzled more than $ 520,000 of investor funds for its personal use, as well as $ 600,000 for the purchase of precious metals to fund another scam. presumed.
The founder had not registered the OIC with the SEC, the commission said. The SEC also disagreed with Middleton's assertion that the chips were not securities.
Veritaseum's lengthy 423-page response exposes its argument that the project actually issued "utility tokens," not titles, that would give licensees access to research reports and, later, its "platform". software. "
The document says:
"Tokens are not investments and are not securities. They do not represent a stake in Veritaseum or its assets; gives no right to the holders to share the profits of the company; does not confer voting rights; and do not pay dividends or interest. Many token holders have used their tokens to take advantage of Veritaseum's unique products and services, which the company has continuously developed and enhanced. "
The SEC had also justified the assets freeze on the claim that Middleton had begun transferring aether funds of investors worth more than $ 2 million to "d & # 39; "Other digital asset addresses", and his personal account soon after the agency had informed his lawyers of upcoming action steps.
The company reacted to this assertion, stating that its legal team had already "demonstrated" to the SEC that the asset transfer was "routine funding of Veritaseum's ongoing legal business activities and was in line with past funding practices of the society".
"The SEC did not disclose this information to the Court in its asset freeze application and incorrectly told the Court that Mr. Middleton had transferred some of his assets to a personal account. In fact, all assets remained under the control of the company, "according to Veritaseum.
The firm added that the asset freeze went against the very purpose of the SEC and hurt investors.
The company called on the court to "lift the freeze in its entirety", continuing:
"The second circuit asked the district courts to pay particular attention to situations in which the freezing of the SEC's assets could financially destroy the defendant's company and thereby defeat the objective of investor protection. … The temporary freeze in this case has already caused considerable prejudice to the owners of Veritaseum's utility tokens, the very ones that the SEC purportedly claim to protect.
He further asserts that the SEC has "provided no evidence that Middleton has dissipated or concealed the assets of the company or is likely to do so in the future".
Ethereum piece in ice picture via Shutterstock
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