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In a recent press release of the U.S. Securities and Exchange Commission (SEC), it has been announced that a New York-based self-proclaimed ‘financial guru,’ Reginald “Reggie” Middleton, and two companies that he owns have been arrested and charged for running a crypto scam that sells security tokens to investors and for attempting to execute all sorts of illicit market manipulations.
The court also ordered to freeze $8 million out of net $14 million an accused raised during the security token offering in 2017 and 2018 respectively. The SEC’s investigation was conducted by Jorge G. Tenreiro and Victor Suthammanont of the New York Regional Office. The officers were further assisted by Roseann Daniello, a staff accountant in the New York Regional Office, John O. Enright of the Cyber Unit, and IT Forensics staff Ken Zavos and Olga Cruz-Ortiz.
According to the press release, Middleton promoted and sold a cryptocurrency called ‘VERI’ on the internet, luring the investors to invest in digital products that never really existed through two fraudulent companies under the name ‘Veritaseum.’ Middleton also misled investors regarding a final virtual product by giving them false representations of the scheme’s business model.
Apart from deceiving investors regarding his crypto ventures, he also lied to investors when it came to the supposed net amount raised during the token offering. When investors demanded the digital asset to kick start the business and at last generate revenue, he failed to present it as the product was just fictional and did not actually materialize in reality.
According to complaint, Middleton is further alleged to manipulate the price of the VERI crypto token on cryptocurrency exchanges for his personal gain. On top of everything, the VERI token was trading on an unlicensed crypto exchange. Additionally, the complaint stated that Middleton moved a big chunk of the investors’ funds into his on own pocket, which is of course completely illegal.
Marc P. Berger, Director of the SEC’s New York Regional Office, stated:
“After learning about Middleton’s transfer of funds, we took quick action to prevent the further dissipation of investor assets. Whether in digital currency or plain cash, we will act to protect investor assets and to pursue fraud and manipulation in our securities markets.”
The SEC filed a complaint against Middleton and his two firms which are collectively labeled Veritaseum with charges of violating the registration and antifraud provisions of the U.S. federal securities laws. Middleton additionally charged with violating the antifraud provisions for his manipulative trading of VERI tokens.