On Nov 27, the United States District Court from the Southern District of California issued an order denying a “Preliminary Injunction” in which the US Securities and Exchange Commission (SEC
) is charging Blockvest LLC. for having offered and sold unregistered securities in the form of its token through its initial coin offering
The U.S. Securities and Exchange Commission got its request denied because it was unable to provide sufficient evidence that the Blockvest ICO passed the Howey test (among other points for which it also did not provide enough evidence), which requires that the plaintiff (in this case the SEC) has to provide substantial evidence against the defendant.
The Howey test requires sufficient evidence to prove the following three parameters:
- An investment of money occurred.
- The investment must be in a common enterprise.
- The investor must expect to make a profit through the efforts of others.
Blockvest never sold any tokens to the public and the only investor is “Rosegold Investments LLP,” which is run by the CEO of Blockvest LLC, Reginald B. Ringgold. The CEO invested about US$175.000 of his own money into the company. Tokens were only sold to 32 pre-vetted test individuals, which did not cause enough for the court to continue supporting the preliminary injunction.
In addition to this charge, the SEC used the fact that Blockvest LLC and its CEO have been using false marketing, have organized a separate “Blockchain Exchange Commission” with a governmental seal, logo, and mission statement similar to the ones that can be found on the SEC’s official website. In addition, the fake organization’s address is exactly the same as SEC’s headquarters.
However, this fraudulent representation is not mentioned in any significant way in the official documents for this motion. The conclusion from the court is a couple of orders. Firstly, the SEC’s request for a preliminary injunction is denied. Second, Blockvest’s request for evidentiary hearing and leave of court to file supplemental declarations is also denied. Third, the court strikes both parties supplemental declarations and responses from the record.
There are no records or mentions of the fraudulent representation of SEC’s approval of Blockvest’s (nonoperational) exchange. Judging by the documents it seems unresolved, but at this time we are unaware whether the SEC will pursue Blockvest for misappropriation of its identity and authority.
What do you think will happen? Let us know in the comments below!
All the information contained on our website is published in good faith and for general information purposes only. Any action the reader takes upon the information found on our website is strictly at their own risk.