On Oct. 3, 2018, the Securities and Exchange Commission (SEC) filed an emergency enforcement action in federal court against Blockvest and its founder, Reginald Buddy Ringgold, III, aka Rasool Abdul Rahim El (“Ringgold”). SEC v. Blockvest, Case No. 3:18-cv-02287 (S.D. Cal. Oct. 3, 2018). In many ways, the case looked like a textbook securities fraud case with some extra sizzle because it involves an Initial Coin Offering (ICO) and a cryptocurrency exchange.

The SEC’s complaint suggests that the defendants raised more than $2.5 million, and makes clear allegations of fraud and false statements. Among other things, the SEC alleges that the defendants falsely claimed that: the ICO and exchange were “approved” by the SEC; the company’s offering is SEC Regulation A+ compliant; and they “partnered” with and would be “audited by” Deloitte Touche Tohmatsu Limited (“Deloitte”). The SEC’s complaint also alleges Blockvest and Ringgold misused the SEC’s seal, as well as the seal of the Commodities Futures Trading Commission and the National Futures Association (NFA) logo, and created a fictitious regulatory agency, the “Blockchain Exchange Commission.”[1] Based on the SEC’s ex parte application for a temporary restraining order (TRO) freezing assets, prohibiting the production of documents, and granting expedited discovery and requiring an accounting, United States District Court Judge Gonzalo P. Curiel entered a TRO against the defendants on Oct. 5, 2018.