Latest news about Bitcoin and all cryptocurrencies. Your daily crypto news habit.
A U.S. district judge has denied the motion filed by the Securities and Exchange Commission (SEC) against cryptocurrency company Blockvest and its founder. The SEC failed to show the court that Blockvestâs tokens are securities. The company has set up a fictitious regulatory agency and claimed its ICO is endorsed by three different U.S. regulators.
Also read:Â Indian Supreme Court Moves Crypto Hearing, Community Calls for Positive Regulations
Judge Denies SECâs Motion
U.S. District Judge Gonzalo P. Curiel has denied the SECâs motion for preliminary injunction against Blockvest Llc and its founder, the case document dated Nov. 27 shows.
The SEC alleged that Blockvestâs BLV tokens are securities based on the three-part Howey test. The defendants disagreed. After hearing âstarkly different factsâ provided by plaintiff SEC and the defendants, the court concluded that âbecause there are disputed issues of fact, the court cannot make a determination whether the test BLV tokens were âsecuritiesâ under the first prong of Howey.â Furthermore, the SEC âhas not demonstratedâ that investors had an âexpectation of profits,â as required to satisfy the second prong of Howey.
According to the court document:
The court concludes that [the] plaintiff has not demonstrated a prima facie showing that there has been a previous violation of the federal securities laws ⊠the court denies plaintiffâs motion for preliminary injunction.
The Complaint
The SEC filed a complaint against Blockvest Llc and its chairman and founder, Reginald Buddy Ringgold III aka Rasool Abdul Rahim El, alleging multiple violations of the Securities Exchange Act. Blockvest was set up to exchange cryptocurrencies but has never become operational, the court document notes.
The complaint states that the defendants had been selling BLV tokens which the SEC claims are unregistered securities. According to the company, the presales were conducted in March, $2.5 million was raised in seven days and nine million tokens were sold by Sept. 17.
The court document describes:
Blockvest purports to be the âfirst licensed and regulated tokenized cryptocurrency exchange & index fund based in the US.â
The SEC explained that Blockvest and Ringgold falsely claim their ICO has been âregisteredâ and âapprovedâ by the commission. They also use the agencyâs seal on their website, along with the seals of the Commodity Futures Trading Commission (CFTC) and the National Futures Association (NFA). In addition, they claim to have partnered with and have been audited by Deloitte. The commission also noted:
Defendants also created a fictitious regulatory agency, the Blockchain Exchange Commission (BEC), creating its own fake government seal, logo, and mission statement that are nearly identical to the SECâs seal, logo and mission statement. Moreover, BECâs âofficeâ is the same address as the SECâs headquarters.
32 Testers and 17 Investors
Ringgold argued that Blockvest has never sold any tokens to the public and its sole investor is Rosegold Investments Llp, which he runs and personally invested more than $175,000 of his own money into. Rosegold âmanages Blockvest and finances Blockvestâs activities,â the court document reveals.
According to the SEC, Blockvest has 32 âpartner testersâ who tested its platform. They put BTC and ETH worth less than $10,000 in total onto the exchange. The commission also says that the defendants admit that Rosegold had 17 other investors during the pre-ICO solicitations and at least eight of them wrote âcoinsâ or âBlockvestâ on their checks.
Nonetheless, Ringgold claims that BLV tokens were never released to any investors and he has never received any money from the sale of BLV tokens. The court document states:
Ringgold recognizes that mistakes were made but no representations or omissions were made in connection with the sale and purchase of securities ⊠Currently, he has ceased all efforts to proceed with the ICO and agrees not to proceed with an ICO until he gives SECâs counsel 30 daysâ notice.
What do you think of the court denying the SECâs motion? Let us know in the comments section below.
Images courtesy of Shutterstock.
Need to calculate your bitcoin holdings? Check our tools section.
Disclaimer
The views and opinions expressed in this article are solely those of the authors and do not reflect the views of Bitcoin Insider. Every investment and trading move involves risk - this is especially true for cryptocurrencies given their volatility. We strongly advise our readers to conduct their own research when making a decision.