Veritaseum has been ordered to pay an $8 million disgorgement fine for selling unregistered securities by a New York Eastern District Court.
The CEO of Delaware-registered blockchain firm Veritaseum LLC and New York-registered Veritaseum Inc., Reggie Middleton, was ordered to pay $8.4 million in disgorgement, according to a new court order. Additionally, Middleton is liable for a civil penalty of $1 million, fintech publication FinanceFeeds reported on Nov. 1, citing a court order issued on Oct. 31.
According to the report, a judge at the New York Eastern District Court has approved a motion for a consent judgment in a securities fraud case against several defendants involved in Veritaseum. Specifically, the defendants are jointly liable for disgorgement of $7,891,600, which represents a part of illegally earned profits as well as prejudgment interest amount of $582,535.
Moreover, the report states that the defendants will not be allowed to engage in any offering of digital security, in accordance with the court order.
Middleton asks the court for more time to respond to the complaint
The case was first brought up by the United States Securities and Exchange Commission (SEC) in mid-August 2019 when the authority filed a complaint against Middleton as well as two of his firms.
In the document, the SEC alleged that the entities were responsible for an unregistered $14.8 million initial coin offering from late 2017 to 2018 and requested a U.S. District Court to freeze the defendants’ assets.
On Oct. 9, the SEC entered settlement talks with Veritaseum, reportedly rescheduling the initial conference at the New York Eastern District Court for Nov. 14, 2019. Since Oct. 9, Veritaseum (VERI) has dropped about 37% from $24 to $15 per coin at press time, according to Coin360.