Litigation Release No. 24400 / February 14, 2019
U.S. Securities and Exchange Commission v. Blockvest LLC, et al., Civil Action No. 18-CV-2287-GPB(MSB) (S.D. Cal.)
On February 14, 2019, the Honorable Gonzalo P. Curiel of the United States District Court for the Southern District of California entered a preliminary injunction against Blockvest LLC and its founder Reginald Buddy Ringgold, III aka Rasool Abdul Rahim El for making fraudulent offers of securities, reconsidering the court’s prior order.
The SEC’s complaint, filed on October 3, 2018, alleged that the defendants claimed that they were planning to raise funds through an initial coin offering (“ICO”) for several financial products that would generate passive income and double-digit returns based on misrepresentations about the firm’s regulatory status. According to the complaint, the defendants used the SEC seal without permission and falsely claimed that their crypto fund was “licensed and regulated.” Ringgold also is alleged to have promoted the ICO with a fake regulatory agency he created-the “Blockchain Exchange Commission,” with a seal similar to the SEC’s and the same address as SEC headquarters.
The court ruled that defendants are enjoined from violating provisions of the federal securities law prohibiting fraudulent offers or sales of securities. In particular, the court ruled that “based upon the additional submitted briefing [the court] concludes that Defendants made an ‘offer’ of unregistered securities which violated Section 17(a) [of the Securities Act of 1933].” The court explained that it “determines that the SEC has demonstrated that the promotion of the ICO of the BLV token was a ‘security’ and satisfies the Howey test.”
The litigation is led by Amy J. Longo of the Los Angeles Regional Office with assistance from Brent W. Wilner, David S. Brown, Robert Grasso, and Matthew Himes, who conducted the investigation. The case is being supervised by Diana K. Tani, John W. Berry, Robert A. Cohen, and Joseph G. Sansone of the Los Angeles Regional Office and Cyber and Market Abuse Units.