The SEC Targets Veritaseum for Securities Fraud

    CryptoMode eCommerce Fraud

    Any cryptocurrency project issuing ICO tokens in recent years faces scrutiny by the SEC. In some cases, the government agency decides to take a strong course of action. Veritaseum is the latest project to face some serious allegations. It is believed the company’s assets are frozen on suspicion of fraud. More specifically, the tokens sold during the ICO are treated as securities and were sold without official approval. 

    The SEC Intervenes

    It is not entirely uncommon for the Securities and Exchange Commission to target ICO issuers. Over the past few months, initial coin offerings have faced increasing scrutiny. Most of the tokens can be labeled as securities, which were issued with approval or a license. Veritaseum seems to fall into this category as well. Despite a successful $14.8m initial coin offering, the SEC is now intervening in a very decisive manner.  The SEC is particularly interested in Reginald Middleton, the individual believed to be operating Veritaseum behind the scenes.

    In the court order filing, it is evident that two companies are of interest. Both Veritaseum Inc and Veritaseum LLC are named. It is believed both companies are involved in fraud when selling digital tokens. The SEC also believes Middleton deceived investors by omitting certain aspects regarding the issued securities. The prior business operated by himself and the non-existent investor demand for VERI are two key issues which need to be addressed. 

    Seizure of $8m 

    While the Veritaseum ICO was quite successful as it raised $14.8m, a large amount of funds is now in the hands of the SEC. A total of $8m was seized through an emergency freeze order. This seems to confirm Middleton converted the funds collected during the ICO to fiat currency and sent it to a personal bank account. Why this transaction was made, remains unclear. It seems to fuel expectations as to how Veritaseum was designed to be an exit scam from day one. That would also explain why the project has lost 88.46% in value compared to its all-time high in June of 2017.

    To put that in perspective, VERI saw a massive pump in the three weeks following its all-time high. With a value of $0.000337 on June 11m, 2017, very few people expected it to hit $538.97 on June 28 of the same year. A 16,000% increase over a three week period is very improbable.  Moreover, that value was never reached again, as the value has continued to bleed to reach the $5.65 level at this time. As VERI is not listed on any major exchanges, it seems unlikely the price will ever recover. 

    What Happens to Investors?

    Considering how so many people invested in Veritaseum, there are a lot of unanswered questions. After all, virtually all investors are affected by the SEC’s intervention. While those who bought at the all-time low are still in a healthy profit, it seems there is no real future for Veritaseum. It is now up to exchange to effectively freeze the trading of VERI altogether. When that will happen exactly, has yet to be determined. If the VERI tokens were sold as unlicensed securities, there will be a lot of potential repercussions to contend with. 

    Disclaimer: This is not trading or investment advice. The above article is for entertainment and education purposes only. Please do your own research before purchasing or investing into any cryptocurrency or digital currency.

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