Last month, I wrote about the complaint filed by Securities and Exchange Commission against Reginald Ringgold and his Blockvest initial coin offering. One of the Blockvest’s marketing ploys was to note its membership in the Blockchain Exchange Commission.
The SEC managed to obtain an emergency court order to halt a planned initial coin offering of Blockvest, which falsely claimed that it was approved by the SEC. The order also halts ongoing pre-ICO sales.
After a hearing and Mr. Ringgold’s presentation of his side of the story, the court decided to deny the SEC’s motion for a preliminary injunction. The court found that there are disputed facts about the nature of Blockvest’s status that makes it unclear if the tokens were securities.
The main defense of Mr. Ringgold is that Blockvest was only in the test stage. The 32 “purchasers” of the Blockvest tokens were test users. It was not clear that the test users had an expectation of profit or that their purchase were actually at risk while Blockvest was testing. The SEC and Mr. Ringgold had different stories of what documents were made available to these testers that induced them to buy the Blockvest tokens.
The “Buy Now” button on the Blockvest website didn’t work.
My reading of the decision is that Blockvest was not yet an ICO so there was no securities offering. The SEC action has stopped it. The Court found that it’s unlikely that Mr. Ringgold will make the offering.
While there is evidence that Ringgold made misrepresentations shortly after the complaint was filed and prior to having retained counsel, Ringgold, with counsel, now asserts he will not pursue the ICO and will provide SEC’s counsel with 30 days’ notice in the event they decide to proceed. By agreeing to stop any pursuit of the ICO, Plaintiff does not oppose the preliminary injunction concerning compliance with federal securities laws. Therefore, Plaintiff has not demonstrated a reasonable likelihood that the wrong will be repeated.
It looks like it’s a win for both sided. The SEC stopped Blockvest before it could take money from the public and Mr. Ringgold managed to avoid immediate SEC action.
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