Anyone who has participated in the crypto sphere in the last few years knows it has attracted malicious actors willing to do just about anything to make a quick buck.
Just yesterday, the North American Securities Administrators Association (NASAA) released its annual enforcement report, which claimed that the markets involved with selling securities related to cryptocurrency and blockchain technology are "saturated with fraud."
And the alleged scams keep on coming.
Today, the SEC announced it had been granted an emergency court order stopping crypto startup Blockvest LLC and its founder, Reginald Buddy Ringgold, III, from pursuing a planned ICO and halting an ongoing pre-ICO sale.
According to the SEC, Blockvest "falsely claimed its ICO and its affiliates received regulatory approval from various agencies, including the SEC." Blockvest and Ringgold are also accused of illegally using the SEC logo to give credibility to their claims.
As if that were not bad enough, the SEC is also accusing Ringgold of fabricating a fake agency called the "Blockchain Exchange Commission" in an attempt to promote Blockvest's ICO. The fake agency's logo is similar to the SEC's and employs the address of the SEC's headquarters for the invented agency.
Additionally, Blockvest and Ringgold are accused of falsely claiming an affiliation with accounting firm the National Futures Association, continuing to do so even after being sent a cease and desist letter from the firm.
An order issued today in the US District Court for the Southern District of California has frozen the assets of both Ringgold and Blockvest and "temporarily prohibits Blockvest and Ringgold from violating the antifraud provisions and securities registration provisions." A hearing to consider continuing the assets freeze and determine whether a preliminary injunction will be issued is set for October 18.
The ultimate goal of the SEC in this case is to not only return "ill-gotten gains" to investors who may have been duped, but to also "prohibit [Ringgold] from participating in offering any securities, including digital securities, in the future or making misrepresentations about regulatory approval."
To combat this and other scams, the SEC's Office of Investor Education and Advocacy and the US Commodity Futures Trading Commission's Office of Customer Education and Outreach have collaborated to issue an investor alert about fraudulent ICOs and misrepresentations of regulatory approval.