The U.S. Securities and Exchange Commission (SEC) has finally won a long-running illegal initial coin offering (ICO) court battle against Blockvest. A U.S. federal court has ordered the company and its founder to pay $700,000 in disgorgement of ill gains and civil penalties.
Blockvest conducted its ICO in 2018, raising $2.5 million from the sale of its ERC-20 BlockVest (BLV) token. Just months later, the SEC requested an injunction against the company for violating securities laws. In the over two years that have followed since, the regulator and the company have engaged in a legal battle that has now come to an end.
The Southern District of California has now ruled in the SEC’s favor.
“It is established that they [the defendants] committed fraud in the connection with the purchase or sale of securities, committed fraud in the offer or sale of securities, and unlawfully offered and sold unregistered securities. Specifically, the defendants misrepresented that the ICO was “registered with” and “approved by” the SEC and used SEC’s logo.”
The court ordered Blockvest and its founder Reginald Buddy Ringgold to disgorge ill-gotten gains in the amount of $332,370. They must also pay $31,355 in prejudgment interest. The SEC will return the disgorged amount to the investors who lost their money to the scam.
Ringgold, who also went by his alias Rasool Abdul Rahim El, will also have to part with an additional $332,370 as a third-tier civil penalty. Third-tier penalties apply in cases involving fraud, deceit, manipulation or reckless disregard of regulatory requirements.
Further, the court imposed a permanent injunction against Blockvest and Ringgold from future violations of the Securities Act.
Blockvest’s fightback against the SEC started positively, with a U.S. court rejecting the SEC’s unregistered securities charges against the firm. The court ruled that the SEC had failed to prove the company violated securities laws.
However, things started going south for Blockvest after the SEC provided evidence proving that the company lied to the court. As it was reported, the SEC accused the company of engaging in willful and bad faith deception.
2020 has seen a record number of digital currency companies face charges from the SEC. The regulator has been looking to clean up the space of the hundreds of scammers that give Bitcoin a bad name. In 2020, illegal ICOs accounted for 25% of the regulator’s $4.7 billion penalty haul.
Some of the companies the SEC has battled include Crypto Traders Management, Oyster Protocol, AML Bitcoin, Kik and SoluTech.