To skirt around the registration requirements of the Federal Securities Laws, Middleton allegedly attempted to falsely register Veri as “software” or “pre-paid fees,” and compared them to gift cards.
The SEC has made it clear that the operation was illegal because a registration statement was never filed (therefore it was not in effect during the offers and sales of Veri). Furthermore, Veri did not qualify for an exemption from registration.
On July 30, 2019 the SEC contacted the defendant’s counsel to inform them they would be seeking approval for enforcement. On July 31st, however, the defendant allegedly moved more than $2 million in ICO funds from an address located on the blockchain into various separate addresses. It was noted that a portion of these funds were used to purchase precious metals.
As the situation sits now, the SEC has requested a prayer for relief to freeze Reginald Middleton’s assets. It has also been requested that the District Court prevent Middleton from potentially interfering with the SEC’s ability to search through relevant documentation. The case is ongoing.
