US SEC Goes After Veritaseum (VERI) for Abused ICO Funds
An emergency lawsuit was mounted by the US Securities and Exchange Commission to curb the burning of ICO money.
An emergency lawsuit was mounted by the US Securities and Exchange Commission to curb the burning of ICO money.
The US Securities and Exchange Commission opened an emergency lawsuit against the Veritaseum (VERI) project and against the co-founder Reggie Middleton. The lawsuit aims to curb the spending of the funds raised during the ICO.
The lawsuit aims to freeze the project’s assets, including digital asset wallets, in an unprecedented form of direct control over an ICO. The SEC will also seek to freeze other funds and accounts and prevent the destruction of documents.
Veritaseum raised the equivalent of $11 million in May 2017, during the peak of the ICO season. The project aimed to build a peer-to-peer payment network to compete with more traditional coins. Later, Veritaseum lost the spotlight and is currently only traded on niche exchanges. But co-founder Middleton was not shy about a lifestyle of luxury and leisure, raising red flags about the project’s future.
The distribution of Ethereum (ETH) raised during an ICO is absolutely unregulated. Projects have been caught using the ETH in vastly different ways. Some projects, such as Augur (REP), sold early to have a runway for development. Others, like the Polkadot ICO, saw their funds lost in a multisig wallet glitch which locked access to all the ETH.
The Substratum (SUB) ICO team caught flak for reportedly day-trading some of the funds to achieve higher gains. And in the case of EOS, traders pointed to signs that the project was recycling some of the ETH raised to prop up the price of the EOS token.
But while the US SEC has targeted multiple token-based projects, this is one of the first cases seeking the freezing of digital assets.
Following the news, the market price of VERI immediately tanked by more than 60%. VERI currently hovers around $5.52, down another 16% since Tuesday. VERI has a wild history of price movements, going above $472 during the peak of the bull market at the end of 2017. The long slide in prices hurt the reputation of VERI and killed enthusiasm for the project, as the token hovered around $16 for months. But the involvement of the SEC was the final coup that may turn VERI into a dead coin.