A judge in the US has denied a motion filed by the SEC against crypto company Blockvest and its founder. According to the judge, the agency failed to prove that Blockvest tokens are securities. The company is accused of setting up a fictitious regulatory agency. It also claimed that three different U.S. regulators endorsed its ICO.
The motion was denied on the bases that there is not enough evidence
According to a document dated Nov. 27, Gonzalo P. Curiel a U.S. District judge has denied a motion that was filed by the SEC for a preliminary injunction against Blockvest Llc and its founder. The agency had alleged the company’s BLV tokens are securities based on the Howey test. However, the defendants disagreed.
The judge decided after hearing starkly different facts that were provided by the plaintiff (SEC) and the defendants. “Because there are disputed issues of fact, the court cannot determine whether the test BLV tokens were ‘securities’ under the first prong of Howey.”
The document also adds that the SEC had not demonstrated that investors expected profits which is necessary to satisfy the second prong of Howey.
“The court concludes that [the] plaintiff has not demonstrated a prima facie showing that there has been a previous violation of the federal securities laws … the court denies plaintiff’s motion for preliminary injunction.”
The complaint against Blockvest Llc and founder who is also chairman, Reginald Buddy Ringgold III pointed at several violations of the Securities Exchange Act. The company had been set up to exchange crypto coins but has never become operational according to the court documents.
The defendant is accused of selling Blockvest tokens (BLV) which the plaintiff claims are unregistered securities. According to the crypto company, presales were conducted in March where $2.5 million was raised in seven days, and nine million tokens were also sold by September 17.
However, the company could find itself in trouble as it had falsely claimed its ICO was registered and approved by the SEC. It had also included the seal of the agency on its website along with those of the National Futures Association (NFA) and the Commodity Futures Trading Commission (CFTC). Besides, it also claimed to have partnered and been audited by Deloitte.
The commission noted:
“Defendants also created a fictitious regulatory agency, the Blockchain Exchange Commission (BEC), creating its own fake government seal, logo, and mission statement that are nearly identical to the SEC’s seal, logo and mission statement. Moreover, BEC’s ‘office’ is the same address as the SEC’s headquarters.”
What’s your take on the judge denying that Blockvest tokens are securities?