On October 11, 2018, the Securities and Exchange Commission announced that it obtained an emergency court order halting a planned initial coin offering (“ICO”), which backers falsely claimed was approved by the SEC. The order also halted ongoing pre-ICO sales by the company, Blockvest LLC (“Blockvest”) and its founder, Reginald Buddy Ringgold, III (“Ringgold”).
According to the SEC, an SEC complaint unsealed on October 10, 2018 alleged that Blockvest falsely claimed its ICO and its affiliates received regulatory approval from various agencies, including the SEC. According to the SEC’s complaint, Blockvest and Ringgold, a/k/a 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 alleged 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.
Allegedly, Blockvest and Ringgold also misrepresented Blockvest’s connections to a well-known accounting firm and continued their fraudulent conduct even after the National Futures Association (NFA) sent them a cease-and-desist letter to stop them from using the NFA’s seal and from making false claims about their status with that organization.
The federal court’s order froze defendants’ assets and temporarily prohibited Blockvest and Ringgold from violating the antifraud provisions and securities registration provisions. A hearing is scheduled for Oct. 18, 2018, to consider continuing the asset freeze and issuance of a preliminary injunction.
The SEC’s complaint charged Blockvest and Ringgold with violating the antifraud and securities registration provisions of the federal securities laws. 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.
The SEC’s Office of Investor Education and Advocacy and the U.S. Commodity Futures Trading Commission’s (“CFTC”) Office of Customer Education and Outreach have jointly issued an investor alert on the use of false claims regarding SEC and CFTC endorsements.