Securities and Exchange Commission v. Blockvest, LLC

Reginald Ringgold III (defendant) was the chairman and founder of Blockvest, LLC (defendant), which he established to exchange cryptocurrency. The Securities and Exchange Commission (SEC) (plaintiff) sued Blockvest and Ringgold, alleging that they offered unregistered securities for sale via Blockvest’s website and other marketing material (including a white paper) in violation of the federal securities laws by selling digital assets known as BLVs via an initial coin offering (ICO). The SEC alleged, among other things, that Blockvest’s marketing material contained numerous false claims, including that the ICO was registered with and approved by the SEC. Per the SEC, 32 people purchased BLVs from Blockvest’s website by clicking on a “buy now” button on the site, and 17 investors in a Blockvest-affiliated entity known as Rosegold also purchased BLVs. In total, the SEC alleged, Blockvest raised approximately $180,000 from BLV sales. The SEC sought a preliminary injunction enjoining Blockvest and Ringgold from continuing to violate the federal securities laws. Blockvest and Ringgold responded that they did not sell BLVs to the general public. Rather, only 32 people bought BLVs, and these 32 people were insiders known to and vetted by Ringgold. Moreover, these 32 people assertedly understood that they just were testing the Blockvest platform and would not receive anything for the purchases. Blockvest and Ringgold also contended that the general public could not buy coins via the “buy now” button because the platform was not live; however, the 32 insiders could buy BLVs through the website with cryptocurrency. In addition, Blockvest and Ringgold (1) denied that Rosegold investors bought BLVs and claimed to have received only $10,000 from the BLV sales (half of which Blockvest spent on transaction fees), not the $180,000 alleged by the SEC; (2) argued that there was no evidence that the 32 buyers read Blockvest’s marketing material before their transactions, and (3) asserted that Blockvest never intended to sell BLVs to the public but instead meant to publicly sell a different token called BLVX.