Embattled Digital Asset Influencer Reggie Middleton have the accused US Securities and Exchange Commission (Sec) to manufacture evidence and lie to the courts of the supervisory authority’s securities Case against its company, according to a series of Bombshell legal applications.
In what the filing calls a “deep storage against the legal process”, Sec is accused of manufacturing and hiding evidence to secure an asset freezing against Middleton’s company Veritaseum – a freezing that ultimately forced Middleton to prematurely solve the case.
Middleton was originally tuning by SEC together with its company Veritaseum 2019 over their verb coin supply and calls it an unregistered securities offer and based on false and misleading statements to investors. Veritaseum’s business account was frozen early in the trial.
After the access freeze, middleton and veritaseum fixed With Sec for $ 9.5 million in 2019. $ 7,891,600 of this was rejected profits, which were then topped by $ 582,535 in interest and a penalty of $ 1,000,000 was applied to Middleton personally. The Court also granted a series of injunctions that practically banished Middleton from the digital asset industry.
Sec lied to the court on money transfers
It would have been the end of the matter, but now Middleton has asked the court to lead the 2019 settlement on the basis that Sec has “committed fraud on the court through a calculated system that undermined legal integrity.”
When it initially took action against Middleton and Veritaseum, Sec showed the urgency in the case by claiming that Middleton secretly spreads investors’ assets to its personal accounts. According to Middleton’s latest applications, this was a complete manufacture.
In the freezer negotiation after Sec’s initial enforcement measure, Sec’s lawyers pointed to monetary transfers worth $ 2 million made by Middleton to what they said were personal accounts shortly after the SEC issued him with a well announcement (which announces the Sec -Securities’ re -enforcement enforcement).
Middleton’s lawyers said that these transfers were routine and had occurred every six months for the past 18 months – something Middleton says Sec knew but chose to disagree in its submissions to the court. In addition, they said that the accounts were not personal at all, but in the company’s name.
Unfortunately for Middleton, Sec succeeded in persuasive the judge, who froze Veritaseum business assets.
But in case of a subsequent hearing, Sec made additional applications, which included further evidence that Middleton is now saying confirms its story about payments.
This includes a Report Archived by SEC’s Blockchain expert Patrick Doody: Buried at the bottom of a response that loses verb trading volumes, Doody admits that he was previously characterized by destination accounts for $ 2 million ($ 2.7 million) that belonged to Middleton when in fact was the accounts.
This was never said to be the chance to come to court at that time, as Middleton and Veritaseum reached a contract agreement with Sec shortly thereafter.
According to Middleton’s latest application that accuses the SEC of fraud on the court:
“Defendants claim that this result was forced by SEC’s misunderstanding before the court, which froze the defendant’s assets based on a lie, which made respondents who cannot afford to have had to continue with legal fees to continue their struggle.
Furthermore, Middleton Sec accuses of fraudulently suppressing evidence in the case, including by scaring witnesses who were willing to give statements in support of Middleton and Veritsaeum.
A member of the Veritaseum Community and Youtuber, Michael Sheahan, was sued by Sec after submitting a commitment in support of Middleton.
“The session became” aggressive, abusive and threatening “, with threats of incorrect accusations of his support and Youtube activity, stopped his public advocates and cost him channel ownership.”
SEC also tried to seize Sheahan’s units.
Another supporter, Lloyd G. Cupp III, was contacted by SEC lawyers and asked to testify against Veritsaeum. CAPP rejected and insisted on verifying being a tool token and not a security. Middleton says Sec then pressed the cup to rethink.
“Although not explicitly threatened, this coercion reflected Sec’s dishonest attempt to shape testimony.”
Is it enough to lead the Middleton-Veritaseum decision?
According to US rules for civil proceedings, a judgment obtained by fraud in the court can be submitted in accordance with Rule 60 (D) (3). The broader section describes the court’s authority to allocate previous judgments: Critically, it states that each such request must be made within a reasonable time and no later than one year after the judgment to be considered.
However, what rule60 (d) (3) does is to state that nothing in these rules affects the court’s ability to allocate a judgment for fraud in the court.
Fraud on court is a high bar to reach. Although there is no hard and fast definition, several American cases have teased the concept.
Sec V ESM Government Securities Inc In 1981, Rule analyzed 60 D (3) and decided that in order for the court fraud, the misunderstanding must threaten the integrity of the legal process itself and not just affect the benefits of a party’s case. Only mere or lawyer visits are not enough in itself to qualify.
Us v buck In 2002, decisions in the court must contain 1) a deliberate system for deceiving the court, 2) with the intention to deceive and 3) that destroys the court’s impartial functions.
Middleton’s latest application claims that SEC is implementing meets all these requirements.
He says the behavior of SEC lawyers was intentional misunderstanding: they knew at the time of the access freezing interrogation that the destination for fund transfers was a Veritaseum account rather than a Reggie Midleton account. This was done “to create a sense of urgent to get the relief they desired – access freezes.”
He also says that the behavior was such that the damaged legal integrity: the SEC lawyer knew both that the information presented at the freezing negotiation was false and that the judge specifically relied on it to make his determination to freeze Veritaseum assets. The submission also points to the witness threat.
Everything pressed the defendants to solve: The frozen funds would otherwise have been used to obtain a robust legal defense, but with the frozen funds Led Middleton and Vertisaeum quite serious penalties because of his decommissioning with Sec. In addition to the almost $ 10 million that are worthy of monetary penalties, he and his companies were prevented from participating in virtually all securities related operations, and Middleton was banned from serving as an officer or manager of some surveyors. Between these prohibitions, Middleton was practically frozen from the digital asset industry.
SEC’s response
The Sec admitted Their response to Middleton’s proposal to lead last week.
First, they deny that such fraud took place. They point out that the judge at that time granted asset freezingShe had explicitly noted that there was ongoing uncertainty about the difference between Middleton’s personal accounts and the Veritaseum accounts and that the parties would be able to present arguments about this before the expiry of the freezer. There was no further argument, as the defendants chose to solve the case.
Secondly, they say that in any case there is no legal basis to leave because case law shows that “exemption for fraud on the court is only available where the fraud was not known at the time of settlement or judgment.”
Quote Philips Lighting Co v SchneiderSEC claims that “examples of behavior that reaches this high standard include a judge, jury that manipulates or hires a lawyer for the sole purpose of incorrectly affecting the judge.”
In this case, SEC claims, that standard is clearly not met.
Why direct Middleton?
Assuming that everything Middleton says is true, Sec’s behavior is flagrantly dishonest and seems to have affected the ultimate course for enforcement. If it is true, it raises the question of why SEC would go so far to ensure a successful result in the Veritaseum case.
On the one hand, such an aggressive endeavor would not be out of the norm for Sec. In fact, Middleton’s latest archiving seems at least partially inspired by another recent case where Sec was sanctioned for misleading the court. In Sec V you -licensing, Sec pursued a blockchain project called Golderbox.
When he tried to freeze the debt box’s assets, the Sec told the court that the debt box had 1) closed 33 bank accounts in 48 hours, 2) liquidated $ 720,000 in investment funds and 3) moved operations outside the United States to avoid supervisory authorities. On the basis of this, the court granted the freezer.
But after complaints from Guldabox, the Court decided that SEC’s representatives of the court were significantly false and misleading: In reality, only 13 of the debt box’s bank accounts had been closed and in fact closed by the banks themselves. There was no evidence of $ 720,000 withdrawals, and the claim that the company planned to flee from the US regulators had been based on a statement taken entirely from the context.
The court was not impressed: the hit Sec with sanctions worth $ 1.8 million.
Still, as a goal for Sec Overreach, Middleton is interesting. Middleton is clearly not reluctant to make powerful enemies: 2022, his company COINBASE sued (Nasdaq: Coins) for $ 350 million, accuses the exchange of violating a Veritaseum patent for blockchain infrastructure services, especially “units, systems and methods to facilitate low confidence and zero confidence value transfers.”
Coinbase responded by challenging the relevant patent with the US Patent and Trademark Office (UPTO), it is largely said that the patent’s subject was not patentable. Up to denied Coinbase’s attempt. The Middleton mood was voluntarily dismissed in 2023, which indicates one outside the court’s settlement.
Middleton has actually been something of a master of intangible property Protection in the digital asset industry. He went on a record to say that BSV is undervalued and points to Massive Blockchain -Patent Portfolio held by Nchain. Middleton would know: He revealed in 2024 that 74% of the patents quoted by his company come from Nchain:
Further emphasizes IP’s importance to BSV Suggestion, Middleton said this when asked about the well -published delusions of attacks addressed to BSV earlier:
Depending on how far Middleton’s case becomes, we can get more contexts about SEC’s handling of the case through the discovery. At the moment, SEC has asked that the request be rejected.
Look: Break solutions on blockchain control barriers
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