Veritaseum CEO Calls For SEC To Unfreeze Company’s Assets
Blockchain and crypto related businesses in the US are in a constant battle with regulatory authorities in the country. One of the major issues that the industry battles against has to do with ICO token sales and ensuring that these remain within the confines of US regulations.
The Securities and Exchange Commission (SEC) filed a lawsuit against blockchain firm, Veritaseum, claiming that the firm’s ICO token sale was illegal. Veritaseum conducted a $15 million token sale before the SEC took the firm to court.
Last week, the SEC’s Cyber Unit got permission to freeze Veritaseum’s assets, and charges were filed against Reginald Middleton, the firm’s CEO. The charges claim that Veritaseum has been selling VERI tokens illegally because these tokens are unregistered securities.
The SEC goes on to say that Middleton’s company tried to find a way around regulations governing token sales by characterizing the VERI token as being similar to things such as software or gift cards. They say that the product being offered by Veritaseum constitutes securities fraud and it is consistent with a Ponzi or pyramid scheme.
Other wrongdoing cited in the filing by the SEC is that Veritaseum deliberately misleads their investors with regards to the blockchain company’s revenue. The SEC claims that different investors were given different facts about how the business venture operates and the revenue that is generated from the business.
Veritaseum Responds To SEC Lawsuit
The blockchain company has responded to the lawsuit, and they claim that the regulatory body has twisted the facts of the token sale to suit their narrative. Middleton says that his firm’s token is not a security and these tokens only have utility functions.
According to a statement issued by Veritaseum, the tokens sold to the firm’s clients enable holders to gain access to the company’s research reports and as the company grows, access to the firm’s software platform. The tokens do not constitute an investment on the part of the holder, and neither are they securities.
The statement goes on to state that the VERI or Veritas tokens do not, in any way, represent an ownership interest in the firm and holders of these tokens do not have a claim on the company’s profit. The tokens do not give a holder any voting rights, and they do not pay any interest or dividends.
Veritaseum goes on to say that several of the token holders have used them to gain access to the firm’s products and services. The company is calling on the SEC to unfreeze it’s assets because the assets are being held due to a misunderstanding of the facts about the ICO token sale. The firm says that the freezing of their assets has caused considerable harm to their clients, and hence it should be reversed.
Cryptocurrency And Interpretation Of Regulations
It seems that there is a disagreement about what counts as security between regulators and companies in the industry. Securities are defined as an investment which is dependent on three factors. The investment should be exchangeable for value, should carry some risk, and it should be tradeable.
This definition applies to all sorts of investments, including cryptocurrency. There needs to be further clarity with regards to tokens offered through ICOs because there seems to be confusion regarding what is a security and what is not.