A U.S. district judge has denied the motion filed by the Securities and Exchange Commission (SEC) against cryptocurrency company Blockvest and its founder. The SEC failed to show the court that Blockvest’s tokens are securities. The company has set up a fictitious regulatory agency and claimed its ICO is endorsed by three different U.S. regulators.
Also read: Indian Supreme Court Moves Crypto Hearing, Community Calls for Positive Regulations
Judge Denies SEC’s Motion
U.S. District Judge Gonzalo P. Curiel has denied the SEC’s motion for preliminary injunction against Blockvest Llc and its founder, the case document dated Nov. 27 shows.
The SEC alleged that Blockvest’s BLV tokens are securities based on the three-part Howey test. The defendants disagreed. After hearing “starkly different facts” provided by plaintiff SEC and the defendants, the court concluded that “because there are disputed issues of fact, the court cannot make a determination whether the test BLV tokens were ‘securities’ under the first prong of Howey.” Furthermore, the SEC “has not demonstrated” that investors had an “expectation of profits,” as required to satisfy the second prong of Howey.
According to the court document:
The court concludes that [the] plaintiff has not demonstrated a prima facie showing that there has been a previous violation of the federal securities laws … the court denies plaintiff’s motion for preliminary injunction.
The Complaint
The SEC filed a complaint against Blockvest Llc and its chairman and founder, Reginald Buddy Ringgold III aka Rasool Abdul Rahim El, alleging multiple violations of the Securities Exchange Act. Blockvest was set up to exchange cryptocurrencies but has never become operational, the court document notes.
The complaint states that the defendants had been selling BLV tokens which the SEC claims are unregistered securities.
