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Injunction For Crypto Startup Over Fraudulent ICO

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A federal judge placed an injunction against a crypto startup for making fraudulent offers of securities, reconsidering his previous order.

U.S. District Judge for the Southern District of California, Gonzalo Curiel, placed a preliminary injunction against Blockvest LLC and its founder Reginald Buddy Ringgold, known as Rasool Abdul Rahim El, reversing a decision the court made last year on a complaint filed by U.S. Securities and Exchange Commission.

In its complaint filed in October, SEC alleged that the defendants claimed that they were planning to raise funds through an initial coin offering for several financial products that would generate passive income and double-digit returns based on misrepresentations about the firm's regulatory status.

According to the complaint, the crypto startup used the SEC seal without permission and falsely claimed that their crypto fund was "licensed and regulated." Ringgold also is alleged to have promoted the ICO with a fake regulatory agency he created - the "Blockchain Exchange Commission," with a seal similar to the SEC's and the same address as SEC headquarters.

The Court made it clear that making an offer of unregistered securities violated Section 17(a) of the Securities Act of 1933.

In his judgment, Curiel cited the risk of future securities law violations based on "newly developed evidence," as well as evidence of past violations.

This is a legal victory for U.S. Securities and Exchange Commission, to whom Curiel had denied an injunction after hearing the case in November.

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