According to new court documents dated January 10, the American Securities and Exchange Commission (SEC) accuses the founder of the crypto investment project Blockvest of having falsified important documents in the case. The SEC had taken Blockvest to court after the company falsely claimed to have SEC approval.
An ICO that was not?
In October 2018, the SEC had obtained a court emergency order to prevent the token sale of Blockvest’s crypto currency. At that time, however, the company had already raised $2.5 million through the sale of the company’s proprietary BLV crypto token. The Southern California District Court had initially doubted that the Securities and Exchange Commission had provided sufficient evidence that the token sale was a violation of securities law. However, this decision was reversed and the ban on the sale was upheld.
As the court documents show, Blockvest is accused of having committed “deliberate and malicious fraud” by providing false information about an alleged approval by the SEC. Blockvest’s defense argues that the crypto tokens were not actually sold to investors, but that they voluntarily transferred money to the company without expecting to purchase the crypto currency. This assertion was also confirmed by “written statements” from some of the alleged investors.
However, the stock exchange supervisory authority accuses Blockvest that at least four of these written statements do not correspond to the truth, one is even said to have a forged signature. All remaining statements were made by friends and acquaintances of the managing director Reginald Buddy Ringgold, who allegedly instructed them directly to lie.
The Securities and Exchange Commission is of the opinion that the forged documents had a direct influence on the court’s first decision, which was in favour of Blockvest:
“The falsified statements had caused the court to reject the first emergency order and, after the second hearing, to order only part of the SEC’s demands. As a result, the defendants [Blockvest] were not charged with all of the alleged charges (including, for example, violations of the Capital Markets Act and Securities Act), which means that investors continue to be endangered by the defendant, and their accounts could not be frozen, which makes it unlikely that funds from affected investors will be recovered.“
Accordingly, the stock exchange supervisory authority is now demanding the “suspension of business” of Blockvest.
Even if the SEC cannot prove that Blockvest’s alleged statements were falsified, the court can decide under American law that the company would have had an interest in such a falsification in order to invalidate a violation of the Securities Act.