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SEC Stops Fraudulent ICO That Falsely Claimed SEC Approval

Litigation Release No. 24314 / October 11, 2018

Securities and Exchange Commission v. Blockvest, LLC and Reginald Buddy Ringgold, III a/k/a Rasool Abdul Rahim El, Civil Action No. 18-CV-2287-GPC (BLM) (S.D. Cal. filed Oct. 3, 2018)

The Securities and Exchange Commission today announced that it has obtained an emergency court order halting a planned initial coin offering (ICO), which backers falsely claimed was approved by the SEC. The order also halts ongoing pre-ICO sales by the company, Blockvest LLC and its founder, Reginald Buddy Ringgold, III.

An SEC complaint unsealed yesterday alleges that Blockvest falsely claimed its ICO and its affiliates received regulatory approval from various agencies, including the SEC. According to the SEC's complaint, Blockvest and Ringgold, who also goes by the name Rasool Abdul Rahim El, were using the SEC seal without permission, a violation of federal law, and falsely claiming their crypto fund was "licensed and regulated." The complaint also alleges Ringgold promoted the ICO with a fake agency he created called the "Blockchain Exchange Commission," using a graphic similar to the SEC's seal and the same address as SEC headquarters.

Blockvest and Ringgold also allegedly misrepresented Blockvest's connections to a well-known accounting firm, and continued their fraudulent conduct even after the National Futures Association (NFA) sent them a cease-and-desist letter to stop them from using the NFA's seal and from making false claims about their status with that organization.

The Honorable Gonzalo P. Curiel, Judge of the U.S. District Court for the Southern District of California, issued an order freezing defendants' assets and other emergency relief. The order also temporarily prohibits Blockvest and Ringgold from violating the antifraud provisions and securities registration provisions. A hearing is scheduled for Oct. 18, 2018, to consider continuing the asset freeze and issuance of a preliminary injunction.

The SEC's Office of Investor Education and Advocacy and the U.S. Commodity Futures Trading Commission's (CFTC) Office of Customer Education and Outreach have jointly issued an investor alert on the use of false claims regarding SEC and CFTC endorsements. Additional information about ICOs is available on Investor.gov and SEC.gov/ICO.

The SEC's complaint charges Blockvest and Ringgold with violating the securities registration and antifraud provisions under Sections 5(a), 5(c), and 17(a) of the Securities Act of 1933 and Section 10(b) of the Securities Exchange Act of 1934 and Rule 10b-5 thereunder. The complaint seeks injunctions, return of ill-gotten gains plus interest and penalties, and a bar against Ringgold to prohibit him from participating in offering any securities, including digital securities, in the future or making misrepresentations about regulatory approval.

The SEC's investigation, which is continuing, is being conducted by David S. Brown and Brent W. Wilner and is being supervised by Diana K. Tani and Joseph G. Sansone of the Market Abuse Unit, John W. Berry of the Los Angeles Regional Office, and Robert A. Cohen of the Cyber Unit. Assisting the investigation is Robert Grasso of the Los Angeles Regional Office. The litigation is being conducted by Amy J. Longo of the Los Angeles Regional Office. The SEC appreciates the assistance of the CFTC and the NFA.

© Polsinelli PC, Polsinelli LLP in California

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Richard Levin brings his experience as a senior legal and compliance officer on Wall Street and in London to bear in advising clients on corporate, securities and regulatory issues. A problem-solver by nature, his practice focuses on helping financial services and technology (FinTech) clients identify and address regulatory issues as they build their businesses.  

The FinTech sector is experiencing rapid changes that are producing innovative new technologies: digital currencies, blockchain technology, peer to peer lending, robo advisors, crowdfunding portals, and...

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Paul Roshka, Polsinelli, financial securities lawyer
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Known for his thorough preparation and persistence, Paul Roshka has a national practice representing companies, their directors, officers, and employees during investigations and enforcement/disciplinary proceedings involving potential violations of the federal and state securities laws, and other financial regulatory statutes and rules. He has handled matters initiated by almost every SEC Regional Office and FINRA District Office, and their Home Offices in Washington, D.C.

He is also a recognized bet-the-company litigator. Paul has defended securities/financial claims in federal and state court, including class action defense. He is a seasoned litigator trusted to resolve our clients’ disputes. Paul and the lawyers he supervises know it is important to keep clients informed, and provide value for the services they render. He handles arbitrations and mediations nationwide. He also serves as a mediator in securities and complex matters involving real estate and other financial claims.

Paul’s passion for resolving complex disputes is equally matched by his passion for positively impacting his community. He has spearheaded numerous significant charitable efforts that have directly and positively impacted the lives of thousands of Arizona children and families. He is a Chairman Emeritus of Phoenix Children’s Hospital, a Past Chairman of the Hospital’s Foundation, Past Chairman of the Children’s Cancer Center and Past Chairman of Phoenix Suns Charities. Paul has served on the Boards of the Salvation Army and Xavier College Preparatory School.  Paul is currently on the Board of Southwest Human Development, an organization that seeks to create a positive future for every child. 

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