A judgment has been reached in a securities fraud case between the Securities and Exchange Commission (SEC) and Blockvest, LLC, a purported financial services company selling digital “BLV” tokens. On May 29, Judge Gonzalo P. Curiel filed an order granting the SEC’s motion for terminating sanctions against Blockvest and its alleged founder, Reginald Buddy Ringgold III. This case is being held in the Southern District of California.
In the original complaint filed on October 3, 2018, the SEC accused the defendants of creating a fictitious regulatory agency called the Blockchain Exchange Commission (BEC), and of lying about registering its upcoming initial coin offering (ICO) with regulators. Initial coin offerings are used to raise funds for using the sale of cryptocurrency. In 2018, Blockvest claimed that it “raised more than $2.5 million in pre-ICO sales of its BLV digital tokens” and would “raise $100 million during its ICO.”
Since the ICOs were neither approved nor registered with SEC or other agencies, they were considered fraudulent. The complaint said that since BEC lacked affiliation with SEC, “Investors’ assets therefore lack the safety or protections that defendants are falsely portraying in their ongoing scheme to raise money through Blockvest’s planned ICO and ongoing pre-sales.” Blockvest tried to defend itself by claiming its BLV tokens were not actually securities and that there were no official “investors” during their initial sale, only “friends and family” members.”
In the newly filed order, Judge Curiel adopts SEC’s motion for terminating sanctions, entering a default judgment against Ringgold. Explaining his decision, Curiel says that Ringgold’s fraud “relates to the legal issues central to this litigation” and he will likely not pay monetary sanctions.