Breaking cases regarding bitcoin investment fraud schemes from the New York Eastern District Court

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New York (November 11, 2019) – In the New York Eastern District Court, two bitcoin investment fraud cases have come to an end lately. Reggie Middleton was accused of an initial coin offering (ICO) of the Veritaseum (VERI) token worth US$14.8 million. He settled the case by paying about US$9.5 million without having to admit or deny the allegations. Blake Harrison Kantor and Nathan Mullins along with four firms have been accused of conducting a cryptocurrency investment scheme. The ATM coin founders have been ordered to pay a fine of US$4.25 million for fraud and misappropriating client funds by the court.

The New York Eastern District Court brought two bitcoin investment fraud scheme cases to an end. The breaking cases include a settlement by the U.S. Securities and Exchange Commission (SEC) in connection with an initial coin offering (ICO) fraud and a sentence of the U.S. Commodity Futures Trading Commission (CFTC) regarding cryptocurrency investment fraud involving binary options.

ICO fraud

Reggie Middleton, the man behind the ICO of the Veritaseum (VERI) cryptocurrency, worth US$14.8 million, has been alleged by the SEC of fraud.

Middleton was accused of running an ICO without registering with the SEC. Allegedly, he raised millions of dollars with the offering. Furthermore, he is supposed to have misled investors, manipulating numbers, and misappropriation of investor’s money.

Particularly, Middleton was accused of giving false information to investors multiple times by referring to the tokens as ‘software’ or prepaid gift cards for technological platforms. Additionally, he allegedly manipulated the securities’ value after the ICO and he allegedly misappropriated at least US$520,000 of investors’ money for personal gain. In total, a value of US$8 million of Middleton’s tokens is missing as he claimed he has been hacked.

On October 31, the case has been settled by the New York Eastern District Court and Middleton. He agreed to pay US$9.5 million without having to admit or deny the allegations, while waiving any right to appeal.

Cryptocurrency investment fraud involving binary options

On November 1, the ATM coin founders, Blake Harrison Kantor and Nathan Mullins were ordered to pay a fine for a cryptocurrency investment scheme as well as misappropriation of client funds. Furthermore, Blue Bit Banc, Blue Bit Analytics, Mercury Cove and G. Thomas Client Services were sentenced along with the ATM founders.

They conducted a fraud scheme providing a financial product with binary options. Investors could obtain a fixed monetary outcome or none at all. Kantor’s and Mullins’ scheme involved an in-house software that manipulated the outcome for investors in favor of their firm Blue Bit Banc.

The New York Eastern District Court fined the founders of US$4.25 million and ordered them to pay restitution to the victims as well as civil monetary payment penalties.