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> The SEC filed charges against Reginald “Reggie” Middleton, a self-described “financial guru,” WOAH they went after Reggie Middleton! Yeah that should be in

> The SEC filed charges against Reginald “Reggie” Middleton, a self-described “financial guru,” WOAH they went after Reggie Middleton! Yeah that should be in the title. From "TheBlockCrypto.com" > What appears to have precipitated this filing, in part, is that after the SEC told Defendants’ lawyers that they were likely to recommend filing of enforcement action, Defendants “moved more than $2 million in remaining offering proceeds from a blockchain address they controlled into other addresses, and used a portion of those funds to purchase more precious metals.” When asked by staff to not spend any more of the SEC funds, Defendants refused. > https://www.theblockcrypto.com/2019/08/13/sec-files-emergency-lawsuit-against-veritaseum-to-stop-spending-millions-of-dollars-in-ico-money/ https://www.theblockcrypto.com/2019/08/13/sec-files-emergenc... So this is interesting in that there was active discussion between the SEC and Reggie's lawyers. This is different than most of these press releases.

lowdose 7y ago
You are completely right. This guy doubled down twice when he burned through his funds. And got caught with his hands in the cookie jar. You wonder if this crypto guy actually understood his digital transactions are traceable in the future. This is such an amateur hour, it is probably why he operated alone. What a character, I am looking forward to the movie. > Explained to viewers in a series of YouTube videos introducing the Offering that their “purchase of Veritas goes directly to fund the transformation of finance” and that “when you purchase Veritas, you create, you fund, the decentralization of this central authority;” that “since Veritas should be or will be a scarce commodity, the more people that come in, the more entities that come in, the more users of Veritas, the greater the demand for Veritas and the more valuable the Veritas is”; and that once potential institutional investors “start looking at these numbers, 30,000% returns . . . negative correlation of assets, there’s going to be a flood, when that flood comes in” there will be “higher demand” for VERI's. Middleton sold 1.9 million VERI tokens during the ICO phase, raising approximately $14.8 million in 2017.
- rolltiide 7y ago
  He understood the transactions were traceable: everything he did is okay when operating under a consumer product framework and not a securities framework. So when moved to securities framework unilaterally by the SEC, then all prior actions and current actions are put under scrutiny too to rationalize putting the prior asset sale as a security There is another perspective and that hearing is reportedly in a few weeks. Its not to disagree with the SEC over securities status, just to come to more agreeable terms over the emergency order and understand why people acted the way they did, instead of a broad paintbrush of malice as described by this docket.
elliekelly 7y ago
Wow, that complaint is kind of nuts. The SEC is accusing him of just about every major financial crime imaginable. But the "Related Individuals and Entities" section broke my heart: > Employee One, age 18, has worked for Veritaseum since 2017. Stealing/embezzling money is disgusting enough but he very well could have ruined this 18 year old kid's life. I generally find the SEC to be pretty reasonable so I would imagine the kid is only included so they can't transfer funds either but I really hope this kid/kid's parents were smart enough to get a lawyer and cooperate.
- PeterisP 7y ago
  Does that imply that he was 16-17 old minor at the time when the crimes were committed?
  - elliekelly 7y ago
    The major crimes, yes, but unless they had a birthday in the last two weeks they were a legal adult when the company moved funds after hearing that the SEC was preparing to bring charges.
- rolltiide 7y ago
  SEC isnt saying that anyone is stealing or embezzling money. They are saying that there was no registration that would give him the green light to do everything they are accusing him of. The SEC merely wants registration and fine print disclaimers. All the actions they outlined are just rationalizing to the judge why they want jurisdiction under securities laws - where misleading statements without contradictory disclaimers are sanctionable through civil court, instead of the consumer protection framework where blatant marketing lies are okay. They also need to describe how this was done knowingly, in order to leave room for the DOJ to charge him under criminal securities laws, where ignorance actually is a defense, so they have to prove he was knowingly violating securities laws. Moving money he collected isnt the issue at all here.
  - elliekelly 7y ago
    I was careful in both my reading of the documents and in the words I chose when commenting. I said "accusing" and not "charging" for good reason. But make no mistake, the SEC is absolutely accusing him of embezzlement (see paragraph 6 of the complaint), securities fraud (paragraphs 2-3), market manipulation (paragraphs 2, 5 & 7), running a Ponzi scheme (paragraph 9), and an unregistered securities offering, as you mentioned. You'll notice all of those accusations carry the potential for criminal charges - except one: an unregistered securities offering. The SEC is an administrative regulatory agency, not a law enforcement agency. That means the SEC brings civil actions to enforce securities laws and then works closely with the Department of Justice to recommend criminal charges against those same defendants. The SEC gathers all of the evidence, brings the civil charges, and then hands the file over to the DOJ for criminal enforcement. I will absolutely, positively, unequivocally guarantee that the DOJ will follow up with criminal charges. And the SEC's charging document is a sneak preview of what those charges will be. The process is usually more coordinated than this but it sounds like Middleton is a particularly stupid defendant. Typically a defendant's attorney would be made aware of forthcoming charges from the SEC (as happened here) and then negotiate a simultaneous plea deal (with the DOJ) and settlement (with the SEC). Instead, the SEC sought an _emergency_ injunction to prevent him from continuing to move the money because he started moving money around when he learned of the forthcoming charges. His moving the funds was the impetus for the SEC filing. If the SEC "merely wants registration and fine print disclaimers" an emergency injunction to freeze client funds would be entirely unnecessary.

lowdose 7y ago

You are completely right. This guy doubled down twice when he burned through his funds. And got caught with his hands in the cookie jar. You wonder if this crypto guy actually understood his digital transactions are traceable in the future. This is such an amateur hour, it is probably why he operated alone. What a character, I am looking forward to the movie. > Explained to viewers in a series of YouTube videos introducing the Offering that their “purchase of Veritas goes directly to fund the transformation of finance” and that “when you purchase Veritas, you create, you fund, the decentralization of this central authority;” that “since Veritas should be or will be a scarce commodity, the more people that come in, the more entities that come in, the more users of Veritas, the greater the demand for Veritas and the more valuable the Veritas is”; and that once potential institutional investors “start looking at these numbers, 30,000% returns . . . negative correlation of assets, there’s going to be a flood, when that flood comes in” there will be “higher demand” for VERI's. Middleton sold 1.9 million VERI tokens during the ICO phase, raising approximately $14.8 million in 2017.

rolltiide 7y ago
He understood the transactions were traceable: everything he did is okay when operating under a consumer product framework and not a securities framework. So when moved to securities framework unilaterally by the SEC, then all prior actions and current actions are put under scrutiny too to rationalize putting the prior asset sale as a security There is another perspective and that hearing is reportedly in a few weeks. Its not to disagree with the SEC over securities status, just to come to more agreeable terms over the emergency order and understand why people acted the way they did, instead of a broad paintbrush of malice as described by this docket.

elliekelly 7y ago

Wow, that complaint is kind of nuts. The SEC is accusing him of just about every major financial crime imaginable. But the "Related Individuals and Entities" section broke my heart: > Employee One, age 18, has worked for Veritaseum since 2017. Stealing/embezzling money is disgusting enough but he very well could have ruined this 18 year old kid's life. I generally find the SEC to be pretty reasonable so I would imagine the kid is only included so they can't transfer funds either but I really hope this kid/kid's parents were smart enough to get a lawyer and cooperate.

PeterisP 7y ago
Does that imply that he was 16-17 old minor at the time when the crimes were committed?
- elliekelly 7y ago
  The major crimes, yes, but unless they had a birthday in the last two weeks they were a legal adult when the company moved funds after hearing that the SEC was preparing to bring charges.
rolltiide 7y ago
SEC isnt saying that anyone is stealing or embezzling money. They are saying that there was no registration that would give him the green light to do everything they are accusing him of. The SEC merely wants registration and fine print disclaimers. All the actions they outlined are just rationalizing to the judge why they want jurisdiction under securities laws - where misleading statements without contradictory disclaimers are sanctionable through civil court, instead of the consumer protection framework where blatant marketing lies are okay. They also need to describe how this was done knowingly, in order to leave room for the DOJ to charge him under criminal securities laws, where ignorance actually is a defense, so they have to prove he was knowingly violating securities laws. Moving money he collected isnt the issue at all here.
- elliekelly 7y ago
  I was careful in both my reading of the documents and in the words I chose when commenting. I said "accusing" and not "charging" for good reason. But make no mistake, the SEC is absolutely accusing him of embezzlement (see paragraph 6 of the complaint), securities fraud (paragraphs 2-3), market manipulation (paragraphs 2, 5 & 7), running a Ponzi scheme (paragraph 9), and an unregistered securities offering, as you mentioned. You'll notice all of those accusations carry the potential for criminal charges - except one: an unregistered securities offering. The SEC is an administrative regulatory agency, not a law enforcement agency. That means the SEC brings civil actions to enforce securities laws and then works closely with the Department of Justice to recommend criminal charges against those same defendants. The SEC gathers all of the evidence, brings the civil charges, and then hands the file over to the DOJ for criminal enforcement. I will absolutely, positively, unequivocally guarantee that the DOJ will follow up with criminal charges. And the SEC's charging document is a sneak preview of what those charges will be. The process is usually more coordinated than this but it sounds like Middleton is a particularly stupid defendant. Typically a defendant's attorney would be made aware of forthcoming charges from the SEC (as happened here) and then negotiate a simultaneous plea deal (with the DOJ) and settlement (with the SEC). Instead, the SEC sought an _emergency_ injunction to prevent him from continuing to move the money because he started moving money around when he learned of the forthcoming charges. His moving the funds was the impetus for the SEC filing. If the SEC "merely wants registration and fine print disclaimers" an emergency injunction to freeze client funds would be entirely unnecessary.