Polsinelli BitBlog | FinTech

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SEC Stops Fraudulent ICO That Falsely Claimed SEC Approval

By: Richard B. Levin and Paul J. Roshka

The Securities and Exchange Commission (“SEC”) recently announced that it has obtained an emergency court order halting a planned initial coin offering (“ICO”), which falsely claimed was approved by the SEC. The order also halted ongoing pre-ICO sales by the company, Blockvest LLC and its founder, Reginald Buddy Ringgold, III.

The SEC complaint alleges that Blockvest falsely claimed its ICO and its affiliates received regulatory approval from various agencies, including the SEC. According to the complaint, 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.” The complaint also alleges 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.  The complaint charges Blockvest and Ringgold with violating the securities registration and antifraud provisions under Sections 5(a), 5(c), and 17(a) of the Securities Act of 1933 and Section 10(b) of the Securities Exchange Act of 1934 and Rule 10b-5 thereunder. The complaint seeks injunctions, return of ill-gotten gains plus interest and penalties, and a bar against Ringgold to prohibit him from participating in offering any securities, including digital securities, in the future or making misrepresentations about regulatory approval.