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The Securities and Exchange Commission is done playing games. Any company even thinking about an ICO to raise capital has got to know by now: mind your p’s and q’s, or the S, E, and the C is coming after you. And that’s what makes the case of Blockvest, a tokenized derivatives exchange, so bewildering.
The SEC announced on Thursday that it has obtained an emergency court order to stop Blockvest’s ICO from moving forward. The violation that Blockvest allegedly committed, however, isn’t some mixup about “unregistered securities” or some other misunderstanding. No, the charge is much less nuanced than that: According to the SEC, Blockvest claimed the regulatory body had approved its ICO when it hadn’t.
The SEC further alleges that Blockvest, and its founder, Reginald Buddy Ringgold III, invented a regulatory authority called the “Blockchain Exchange Commission” (BEC) whose logo and headquarters address bears a striking resemblance to the very real regulatory authority now taking it to court.
The agency’s complaint states that Ringgold (also known as “Rasool Abdul Rahim El”) originally formed the “commission” as “Fartlife LLC” (note: that isn’t a typo) in January 2015. He then, allegedly, changed the name to “Smartlife” in 2017 before eventually landing on the SEC knockoff.
For now, the court order halts Blockvest’s pre-ICO sales, freezes Ringgold’s assets, and temporarily prohibits Ringgold and his company “from violating the antifraud provisions and securities registration provisions,” according to the SEC.
Blockvest denies any wrongdoing. In an emailed statement, Ringgold says he is “shocked” by the allegations against him and claims the SEC’s complaint contains “serious factual inaccuracies.”
“It is particularly disturbing that the SEC departed from its own traditional practice of providing advance notice and a timely opportunity to address [its] questions in advance of filing an action,” he says. It’s as if someone had recently called out the SEC for handling things quietly or something.
Ringgold intends to fight the allegations in court and says he’ll do everything possible to clear his name. Blockvest also points out that since its token was in a “private sale phase,” there was technically “no ICO to stop.” In fact, the company says it had decided to “put off the ICO due to the unclear regulatory landscape.”
Indeed, Blockvest’s website and social media profiles show no sign that it saw any of this coming. According to recent posts, the company had been contemplating a move away from the Ethereum blockchain to test out NEM.
The SEC plans to seek permanent injunctions, disgorgement, and civil penalties at a hearing set for October 18. Is it too late to go back to Fartlife?