Securities And Exchange Commission To Probe ICO Scam, Veritaseum, Once Valued At $950 Million
The U.S Securities Exchange Commission (SEC) filed a complaint against Veritaseum founder, Reginald Middleton, for defrauding investors during the ICO launch of VERI tokens in April to May 2017.
In a post released by research firm, Hindenburg Research, the commission will further charge two companies – New York registered, Veritaseum Inc. and Delaware registered, Veritaseum LLC. – for misleading investors, interfering with the market to boost their price and misappropriation of investors’ funds.
‘Misrepresentation and misinterpretation of facts’
During the token sale in 2017, the companies defrauded investors through advertisements and brochures to increase participation in the ICO. During the ICO process, the company raised $14.8 million USD from investors using manipulation and misinterpretation of the value the VERI tokens actually held.
Furthermore, the company’s pledge to release $35 million USD worth of VERI once the ICO process was fulfilled never materialized – amounting to fraud. The remaining VERI tokens after the ICO process were to be sold to institutional investors only but the company continued selling them on the secondary market to anyone who would buy.
SEC looking into VERI tokens
The commission is further looking into the VERI token, a cryptocurrency touted as a utility token, despite offering any utility to their customers. The Veritaseum team lied to its investors that the token is redeemable for consultancy and advisory services on its platform. The ERC 20 token was offered on Ethereum blockchain priced at a 30:1 ratio.
The commission is filing a request to a district court to provide an order to prevent defendants from interfering with the investigation process. Furthermore, the SEC wants to be granted access to check and track the movement of digital assets across exchanges and other third parties.
Since the news broke out, Veritaseum, a project that reached a total value of $957 million USD at the height of the cryptocurrency boom in early 2018, has lost over 77% of its value in the past 24 hours.