Cryptocurrency investors are digesting another scandal this week after the SEC charged Reginald "Reggie" Middleton Tuesday with digital securities fraud and market manipulation.
What Happened
The SEC said it has charged Middleton and his entities Veritaseum, Inc. and Veritaseum, LLC with fraud and froze $8 million in assets.
Why It’s Important
Middleton collected $14.8 million in 2017 and 2018 from investors by selling digital tokens called VERI online, according to the regulatory agency.
The SEC alleges Middleton’s sales pitches were deceptive and included important misrepresentations and omissions.
“Among other things, defendants allegedly knowingly misled investors about their prior business venture and the use of offering proceeds, touted oversized — but fictitious — investor demand for VERI, and claimed to have a product ready to generate revenue when no such product existed,” the SEC said in a press release.
Legitimate cryptocurrencies such as Bitcoin and Ethereum have been fighting to gain legitimacy in the minds of investors and users, and cases such as these aren’t helping the cause.
Since January 2018, the price of VERI has dropped from above $450 to under $5.
What’s Next
The SEC said it is seeking permanent injunctions, disgorgement plus interest and penalties and a ban on digital securities offering for Middleton. In addition, they are seeking an officer-and-director bar.
Cryptocurrency investors will be watching closely to see how the Middleton case plays out. They will also be taking note of whether the charges against Middleton are an indication that the SEC is stepping up its digital currency enforcement efforts.
Related Links:
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