Veritaseum (VERI) Plunges 78% in Hours as SEC Reigns in Free-Spending CEO
Veritaseum (VERI) decreased by over 78% in value on Tuesday, shortly after the SEC filed a lawsuit to stop the CEO from spending any more of the token’s ICO funds.
After months of misleading investors and manipulating token trades, the SEC says Reggie Middleton spent another $2 million worth of VERI on ‘precious metals’ as recently as July 30th, 2019.
According to the SEC, that was the same day the commission informed the defendant’s counsel of impending enforcement actions. Middleton apparently began cashing out his VERI to precious metals as early as August 2018 – the same month he arrived in Nigeria talking about plans to build a pan-African superhighway with cryptocurrency proceeds.
Veritaseum Plunges on SEC Lawsuit
For ten short days in January 2018, the market cap of Veritaseum swelled to over one billion dollars. Around 18 months on, and 99.2% of that value has disappeared.
On Tuesday alone the VERI token price sunk 78%, from $17.48 to $3.77. Such was the ferocity of the sudden drop, a +100% rebound was witnessed in the three hours immediately afterwards as the token price recovered to over $8.
The last time Veritaseum made it to the pages of Hacked was almost one year ago exactly. That’s when Reggie Middleton told the Nigerian edition of The Guardian of his plans to build a pan-African economic hub, which would include a 4-lane continental superhighway.
However, in light of the SEC’s present lawsuit, it appears the trip to Africa may have been a convenient cover for his plans to buy precious metals using VERI ICO funds. From the SEC’s filing to the New York Eastern District Federal Court:
“In August 2018, Defendants began purchasing precious metal with the proceeds of the Offering…[then, on July 30th 2019, when notified of impending legal enforcement]…Defendants moved more than $2 million in remaining offering proceeds from a blockchain address they controlled into other addresses, and used a portion of those funds to purchase more precious metals.”
Manipulation, Price Pumps
The SEC says Middleton used manipulative trades on a digital asset exchange to artificially inflate the value of VERI tokens. He then marketed the investment prospect of the token based on the strength of that artificial pump.
Middleton allegedly used the ICO proceeds to pay his own staff, clear personal debts, and cover his own personal living expenses. The SEC requested that Middleton stop spending the funds while legal proceedings are still under way, but Middleton’s counsel flat out declined the commission’s request.
One year from the token’s last +100% pump (probably artificial), it representation on exchanges remained static. In 2018, the majority of its volume went through Mercatox, and that was the case on Tuesday.
If the $2.4 million trade volume was genuine, it would place it above the 19th ranked IOTA, and the 24th ranked Ontology, according to OpenMarketCap.
Disclaimer: The author owns bitcoin, Ethereum and other cryptocurrencies. He holds investment positions in the coins, but does not engage in short-term or day-trading.
Featured image courtesy of Shutterstock. Chart via CoinMarketCap.