The Latest In Japan FinTech

November 08, 2023

First, Hong Kong will push anything that the US cannot or is unwilling to do, or that gets mired in “regulatory competition” among the various agencies: cryptocurrency exchanges, tokenization, e-HKD, stablecoins, and even a Bitcoin ETF are all part of the conversation. Competition is good, and in addition to providing optionality in the geo-political chess game, will lift the tide for all players in Asia. We welcome that.

Second, the programs offered by the Hong Kong Science & Technology Park (HKSTP) to attract startups and scaleups are first class. They are not only backed by strong funding options, but also by a highly skilled, well-connected, and incentivized team of business developers, account managers, etc. This is unlike many of the Japanese programs, where you get a Big Four consultant two years out of college to talk to when applying for a Tokyo Metropolitan Government grant.

Third, at the very least in the family office space, Saudi Arabia has taken quite a bit of mind share as the next big opportunity. The conversation has certainly started to move on from “Hong Kong, Singapore or the UAE”. I was expecting this still to be quite low key, but the cat seems to be out of the bag.

Now let us get back to what we are going to cover this week:

Venture Capital & Private Markets: the Osaka Digital Exchange (ODX) has accepted equity participations; Mizuho Capital and Mizuho Bank have established a JPY 15bn venture capital fund; Mizuho Capital has made its first investment through the “Mizuho Venture Debt Fund”; MUFJ and Mizuho invest in Sensyn Robotics’ JPY 2.25bn (USD 15m) equity round; Digital Garage is investing in Komainu; alternative investment platform LUCA Japan closed its Pre-Series A; gumi Cryptos Capital and Arcane Group led Moonveil Entertainment’s funding round, with Infinity Venture Crypto participating; GMO Internet Group invests in INTMAX; MUFG Innovation Partners (MUIP) invests in Broom, the Indonesia-based auto financing startup; SBI Holdings has entered into a strategic capital alliance agreement with Novastar for investment business on the African continent; SBI Investment and Nikon Corporation have jointly established the “Nikon-SBI Innovation Fund II”
Banking: SumiTrust has more than halved its net income projection for the fiscal year, from JPY 200bn to JPY 85bn; Sumitomo Mitsui Banking Corporation has opened a representative office in Washington, D.C.; MUFG has launched its Green Deposit in South Korea and Taiwan; Mizuho Bank and Blue Lab will start a demonstration experiment this month using “LocoViz” to support regional revitalization; b8ta Japan will partner with Mitsubishi UFJ Trust and Banking Corporation during November 2023
Payments: Tap-to-Pay will be available at Osaka railways in 2024 for World Expo; JCB expands partnership with Stripe to boost e-commerce merchant acceptance in Europe, Singapore and Hong Kong
Insurance: Dai-ichi Life and YuLife have commenced a pilot implementation of the YuLife Wellbeing Model
Capital Markets & Asset Management: Q3 (July to September) league tables
Digital Assets: Policymakers partner to foster responsible digital asset innovation; SBI Digital Markets collaborated with UBS Asset Management to conclude a technical pilot for the issuance and distribution of a tokenised Variable Capital Company (VCC) fund; Komainu and Crypto Garage are collaborating in building best-in-class institutional crypto service levels in Japan; Laser Digital, in cooperation with Nomura, has debuted the ‘Nomura & Laser Digital Botanical Garden’ in The Sandbox metaverse; Okcoin Japan has been officially welcomed as the latest corporate baker on the Tezos blockchain
The Last Word: All ships leak

···

Venture Capital & Private Markets

The Osaka Digital Exchange (ODX) has accepted equity participations by Cboe Worldwide Holdings, a subsidiary of Cboe Global Markets, Virtu Investments, a subsidiary of Virtu Financial, and Optiver PSI, a subsidiary of Optiver Holding
Mizuho Capital and Mizuho Bank have established a JPY 15bn venture capital fund called “Mizuho Growth Support Fund №5” (the “№5 Fund”)
Mizuho Capital has invested in JUNTEN BIO through the “Mizuho Venture Debt Fund”; the JPY 100bn fund was established in August to provide financing through bonds with stock acquisition rights; this is the first project of the fund
MUFJ and Mizuho invest in Sensyn Robotics’ JPY 2.25bn (USD 15m) equity round as new shareholders alongside Nabtesco Technology Ventures, with participation from existing shareholders ENEOS Innovation Partners and V-Cube; additional debt financing was raised from Japan Finance Corporation and Shoko Chukin Bank
Digital Garage is investing in Komainu as part of their collaboration agreement (see “Digital Assets” below), joining other Japanese shareholders of Komainu, including Laser Digital and Nomura Research Institute
Alternative investment platform LUCA Japan closed its Pre-Series A funding round by raising USD 2.7m (JPY 400m) from VCs and angel investors; this brings the cumulative raised amount since its inception to approximately USD 4.2m (JPY 630m)
gumi Cryptos Capital and Arcane Group led Moonveil Entertainment’s funding round (which had two parts) for multiplayer mobile games using blockchain technology, with additional support from other investors such as LongHash Ventures, IOSG Ventures and Infinity Ventures Crypto (IVC); the company raised $3 million in September 2022 and $2.4 million more recently
GMO Internet Group invests in INTMAX; Ryodan Systems AG, a leading Swiss blockchain company, has completed its strategic funding round for its innovative Ethereum Layer2 project, “INTMAX zkRollup”, and the recently launched “INTMAX Wallet”, with participation from LD Capital, KX, GMO web3, and Kepple Africa Ventures
MUFG Innovation Partners (MUIP) invests in Broom; the Indonesia-based auto financing startup has raised USD 4m in funding from existing investors Openspace Ventures, AC Ventures, and MUIP, among others; founded in June 2021, Broom helps used car dealers to work more efficiently by means of asset-backed lending
Funding Societies | Modalku, the largest unified small and medium enterprises (SME) digital finance platform in Southeast Asia, has raised USD 7.5m in debt from Norfund, a Development Financial Institution (DFI), which operates an investment fund owned by the Norwegian government for developing countries; SoftBank Vision Fund 2, SoftBank Ventures, and SMBC Bank are among Funding Societies’ investors
SBI Holdings has entered into a strategic capital alliance agreement with Novastar for investment business on the African continent; SBI Holdings will invest USD 40m in funds managed by Novastar; further, SBI Holdings plans to help Novastar raise an equal investment amount from Japanese investors; SBI Holdings will also own a portion of Novastar’s shares and will dispatch part-time executives
SBI Investment and Nikon Corporation have jointly established the “Nikon-SBI Innovation Fund II”; this Fund will make investments in the latest technologies and services such as aerospace, energy, carbon neutral, etc. which are considered as new areas looking beyond Nikon’s Medium-Term Management Plan
Axiata Digital & Analytics (ADA), announced Mitsui’s investment of USD 58m in ADA, facilitated through ADA’s holding company, Axiata Digital Services (ADS); Mitsui’s additional investment has established a watermark valuation of USD 550m for ADA, reflecting the company’s continued growth and innovation in the digital and data transformation domain; other shareholders in ADA include Sumitomo and Softbank

···

Banking

SumiTrust has more than halved its net income projection for the fiscal year, from JPY 200bn to JPY 85bn, due to the unwinding of hedges that were put on to protect valuation gains on cross-shareholdings as the Nikkei was rising strongly this year; in contrast, ordinary business has been reported as strong, and the forecast slightly raised for the year; the dividend per share remains unchanged
Sumitomo Mitsui Banking Corporation has opened a representative office in Washington, D.C. to deepen ties with key stakeholders as the bank continues to expand its support of the U.S. economy
MUFG has launched its Green Deposit in South Korea and Taiwan, reaffirming the popularity of this product and the increasing acceptance of Asia’s corporates in exploring differentiated solutions in pursuit of their climate goals
Mizuho Bank and Blue Lab will start a demonstration experiment this month using “LocoViz”, a blockchain-based service that provides new connections with local communities for those who feel an attachment to a particular region
b8ta Japan will partner with Mitsubishi UFJ Trust and Banking Corporation during November 2023; for one month, b8ta Tokyo — Shibuya will exhibit products from Mitsubishi UFJ Trust and Banking Corporation business partners who utilize OMO Data Search; b8ta will acquire offline data for customers visiting physical stores, while Mitsubishi UFJ Trust and Banking’s “Dprime” app will acquire online data from its approximately 300,000 members; the partners will release analytics and begin a collaboration with OMO Data Search, a customer research support service that transcends the boundaries between online and offline
Malaysian bank CIMB and Japanese publicly listed finance company J Trust are among firms vying to buy Indonesia’s PT Bank Commonwealth in a deal that could value the lender at USD 400–500m

···

Payments

Tap-to-Pay will be available at Osaka railways in 2024 for World Expo; Hankyu Corporation, Sumitomo Mitsui Card, Visa Worldwide Japan, JCB, Toshiba, and QUADRAC will start a railway riding service using credit cards, debit cards, and prepaid cards with touch payment functions, as well as smartphones with such cards set up, utilizing Sumitomo Mitsui Card’s transit solution for public transportation “stera transit” at all Hankyu railway stations by 2024; similar announcements were published by Kinki Nippon Railways and Hanshin Railways
JCB expands partnership with Stripe to boost e-commerce merchant acceptance in Europe, Singapore and Hong Kong; JCB International, the international operations subsidiary of JCB, and Stripe have expanded their partnership to provide new growth opportunities for all of Stripe’s e-commerce merchants in those areas by welcoming JCB’s valued cardmembers

···

Insurance

Dai-ichi Life and YuLife, the tech-driven financial services company on a mission to inspire life, have commenced a pilot implementation of the YuLife Wellbeing Model, a variety of health and wellness services including the award-winning YuLife app and online hub, in Japan

···

Capital Markets & Asset Management

The league tables for the second quarters are out, with some big movers in the M&A segment

M&A: 1 — Daiwa (up from 9), 2 — Nomura (up from 6), 3 — Plutus (up from 13), 4 — MUFJ Morgan Stanley (down from 1), 5 — SMBC Nikko (up from 7)
Equity Underwriting: 1 — Nomura, 2 — SMBC Nikko, 3 — Mizuho, 4 — Daiwa, 5 — Goldman Sachs
Debt Underwriting: 1 — Mizuho, 2 — SMBC Nikko, 3 — Nomura, 4 — Daiwa, 5 — MUFJ Morgan Stanley

···

Digital Assets

Policymakers partner to foster responsible digital asset innovation

The Monetary Authority of Singapore (MAS) is partnering the Financial Services Agency of Japan (FSA), the Swiss Financial Market Supervisory Authority (FINMA) and the United Kingdom’s Financial Conduct Authority (FCA) to advance digital asset pilots in fixed income, foreign exchange and asset management products
SBI Digital Markets collaborated with UBS Asset Management to conclude a technical pilot for the issuance and distribution of a tokenised Variable Capital Company (VCC) fund as part of the Monetary Authority of Singapore (MAS)’s Project Guardian, a collaborative industry initiative with the financial industry that seeks to test the feasibility of applications in asset tokenisation and DeFi while managing risks to financial stability and integrity; the pilot was executed on a permissioned environment of the Ethereum network
Komainu, a leading digital asset custodian, and Crypto Garage, a Japanese digital asset services company and subsidiary of Digital Garage, are collaborating in building best-in-class institutional crypto service levels in Japan
Laser Digital, in cooperation with Nomura, has debuted the ‘Nomura & Laser Digital Botanical Garden’ in The Sandbox metaverse; the experience showcases the combined resources and talent at Nomura’s Digital Company and Laser Digital, to accelerate innovations in the digital asset sector
Okcoin Japan has been officially welcomed as the latest corporate baker on the Tezos blockchain; this move not only marks a notable addition to Tezos’ list of corporate bakers, which includes names like Google Cloud and Ubisoft, but also heralds the introduction of XTZ staking services on OKCoin Japan’s platform starting November 8, 2023
GensoKishi ONLINE -Meta World- is committed to building on Immutable zkEVM, powered by Polygon Labs; Genso is an MMORPG and one of the most significant web3 gaming projects in Japan; the project had been incorporated in Japan due to the known taxation issues for tokens held by corporations
THXNET., a Japan-based Web3-as-a-Service Blockchain Infrastructure firm, and AsiaTokenFund Group, a leading web3 conglomerate based in Asia announced a strategic partnership with a focus on extending the reach of THXNET.’s ground-breaking blockchain technology infrastructure services into the broader Asian market

···

Other Media

Bank of Japan, “Statement on Monetary Policy”
Oxford Economics, “BOJ to allow 10-year JGB yields to exceed 1%”
The Financial Services Agency has published the materials used for its seventh and eighth Japan Corporate Governance Forum, with the Asian Corporate Governance Association (ACGA) and the International Corporate Governance Network, respectively
The Ministry of Economy, Trade and Industry (METI) has published case studies relating to the use of inbound M&A transactions; while originally dated April 19, 2023, the document has been updated in the interim
Anderson, Mori & Tomotsune, “Recent developments in Carbon Offset Markets in Japan”
Whithersworldwide, “Navigating fund management licensing in Singapore, Hong Kong and Japan”

···

The Last Word: All ships leak

Japan is a hotbed of information leaks. In a wonderful piece published in the Japan Times, Bloomberg’s Gearoid Reidy and Daniel Moss take on the Bank of Japan, noting that every time Bank of Japan Governor Kazuo Ueda has made an announcement since taking up his post, that information has appeared initially not in the public domain, but in the pages of the fourth estate. Rather than expecting the BOJ press release to arrive for everyone at the same time, pundits and traders alike spend the morning hitting the refresh button on the Nikkei home page to get the latest scoop.

The BOJ is far from the exception. Even for listed companies, including the mega banks, the Nikkei appears to publish a story before the companies’ websites and investor relation pages have been updated. While often an argument can be had regarding the materiality of the information, such a judgement is best left to the investor, not the IR department. At the very least those corporations listed in the US run the potential risk of investor lawsuits. And with regards to the BOJ, the materiality of the information is undisputed.

If you want to be viewed as a Global Financial Center, act like one.

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February 17, 2025

The Dawn of DeFi: The Hidden War for a Decentralized Future

👉 DON'T FADE THIS ARTICLE~ Crypto Michael AKA "The Dinarian"

The below article is NOT financial advice, it is being broadcast for entertainment purposes only. You should DO YOUR OWN RESEARCH and NEVER invest any more than you are willing to lose. On that note, THIS ARTICLE AND THE UNDERLYING ASSET DISCUSSED COULD CHANGE YOUR LIFE FOR THE BETTER FOREVER! You SHOULD pay close attention as this MAY BE THE MOST IMPORTANT article you could ever have read, unless you were fortunate enough to read the Bitcoin whitepaper and had invested in it back in 2008. The asset I am about to present to you, COULD EASILY FLIP BITCOIN! ESPECIALLY WITH TODAYS ADMINISTRATION IN PLACE!
~ Namasté 🙏 Crypto Michael AKA "The Dinarian"

Attempted Theft of the World's Most Valuable Property, SEC Lawfare & The ETHgate Scandal

It is widely accepted that the media often spreads misinformation and hides any truth that challenge the establishments narratives. Well, this is one of those hidden truths...

Loans without Banks, Trades without Exchanges, Contracts without Lawyers. Peer to Peer Capital Markets disrupts traditional finance by removing middlemen and counter-party risk, enabling you to become your own bank by holding the keys to it all in your own privately held digital wallet.

To what lengths do you think the establishment would go to defend their control of the financial system? A system seemingly ripe with market manipulation, naked shorts, money laundering and regulatory capture.

The Myth of Open Source

For context, in the realm of open source, major corporations can engage in Intellectual Property theft by using open source projects to gain insights, technology, or legal protections without fully reciprocating to the community. Companies might contribute code to an open source project, only to later use that same code in commercial products, extending it with enhancements, essentially using open source as a low-cost R&D resource. Patents are crucial here, serving as a defense mechanism. Although open-source licenses cover copyrights, they don't extend to patents, meaning that companies holding patents can enforce legal protections against unauthorized commercial use, ensuring that any commercial application of their patented technology within open-source software requires proper licensing or recognition. This protection has historically led to the hyper-growth of industries like mobile phones and the internet, where patented technologies could be safely shared and built upon, promoting innovation and market expansion.

Validating Inventorship

In fields such as technology, pharmaceuticals, and manufacturing, patents are vital for safeguarding new inventions, with Nikola Tesla's extensive patent portfolio serving as a testament to his contributions to science.

However, Tesla's revolutionary inventions, like the Wardenclyffe Tower which aimed at providing free wireless energy, faced fierce opposition due to their potential to disrupt established control over energy markets. Financially sabotaged by investors like J.P. Morgan, legally challenged through "the war of currents" by Thomas Edison's promotion of the less efficient Direct Current system, and undermined by media smear campaigns, Tesla's work was systematically suppressed. After his death, the FBI's seizure of his documents further suggests efforts to control or conceal his ideas that could disrupt centralized energy distribution, illustrating how innovation can be stifled to maintain existing power structures.

Could this type of suppression still be happening today?

The Genesis of Decentralized Finance

Reggie Middleton first introduced Distributed Finance what would later become known as Decentralized Finance (DeFi), in 2013 when he invented and patented technologies under the title "Devices, systems, and methods for facilitating low trust and zero trust value transfers." This included groundbreaking concepts like programmable Smart Contracts, Swaps, Tokenized Assets, NFTs, Stable Coins, Digital Wallets, and even underpin Central Bank Digital Currencies (CBDCs).

https://patents.google.com/patent/US11196566B2/en?oq=US11196566+

Called by many as "The Most Valuable Property in the World", his patents US11196566B2, US11895246B2, JP6813477B2, JP7204231B2, JP7533974B2, & JP7533983B2 have been cited over 138 times by major financial institutions, underscoring their foundational role in the blockchain industry.

His patents cover:

Trustless Peer-to-Peer Value Transfers: Systems for enabling decentralized and secure value transfers between parties without the need for intermediaries. Applicable to cryptocurrency transactions, DeFi platforms, and digital payment systems.
Decentralized Financial Systems (DeFi): Methods and devices that facilitate decentralized trading, lending, borrowing, and yield generation. Impacting decentralized exchanges (DEXs) like Uniswap, SushiSwap, and similar platforms.
Smart Contracts: Implementation of self-executing contracts on blockchain networks, used to automate agreements and enforce conditions without intermediaries. Essential for platforms such as Ethereum, Cardano, and other Layer-1 and Layer-2 blockchain protocols.
Tokenized Asset Trading: Methods for creating, transferring, and trading tokenized assets, including cryptocurrencies, non-fungible tokens (NFTs), and digital securities. Platforms like OpenSea, Rarible, and asset tokenization platforms may fall within the scope.
Cryptographic Security and Wallet Systems: Systems for securing digital assets using cryptographic methods, including cold storage, multi-signature wallets, and multi-party computation (MPC). Potential overlaps with services offered by companies like Coinbase, Kraken, Gemini, and institutional custody providers.
Decentralized Identity and Verification Systems: Technologies for managing and verifying digital identities on decentralized networks, including for KYC (Know Your Customer) purposes. Likely touching on identity solutions like Civic, BrightID, and Blockstack.
Blockchain-Based Voting and Governance: Systems for implementing decentralized voting, governance, and consensus mechanisms, foundational to DAO (Decentralized Autonomous Organizations). Relevant to governance platforms like Aragon, Snapshot, and MakerDAO.
AI Economic Agentic Computing: First introduced by the VeADIR Platform refers to the application of autonomous agents in economic systems, where software entities can make decisions, negotiate, and execute transactions independently. These agents use artificial intelligence to analyze market data, predict trends, and optimize economic activities like trading, resource allocation, and supply chain management. Used by OpenAi, Claude Sonnet, Meta and xAI.

The societal value of these patents to disrupt traditional financial models and fintech business practises, by essentially removing the banks as middlemen, create significant economic incentives to suppress his work.

True Decentralization

Current Decentralized Exchanges (DEXs) often fall short of being truly decentralized due to various practical and structural limitations. Although DEXs leverage blockchain technology and smart contracts to enable trading without a central authority, aspects like governance, liquidity, and user interface can introduce centralization. Governance tokens might be concentrated in the hands of a few, influencing decision-making unevenly. The frontend, controlled by developers, represents a centralized point of control or potential failure. Liquidity pools can be dominated by a handful of large providers, leading to centralized liquidity dynamics. Some DEXs implement regulatory compliance like KYC/AML, which inherently involves centralized oversight. The use of layer-2 solutions for scalability might also undermine decentralization if not fully autonomous.

However, patents like US11196566B2 and US11895246B2 could pave the way for true decentralization by introducing innovations in blockchain interoperability and decentralized governance mechanisms. These patents potentially offer solutions for more evenly distributed control over exchange operations, enhancing the autonomy and distribution of decision-making, thus moving closer to genuine decentralization in the DEX ecosystem, which can be expanded to other industries like Healthcare, Supply Chain, or any other industry that trades value.

Who is Reggie Middleton?

Reggie Middleton, through his BoomBustBlog, became a notable figure in financial analysis, particularly for his early and accurate predictions regarding the collapses of Lehman Brothers and Bear Stearns during the 2008 financial crisis. His blog was renowned for providing in-depth, contrarian insights into economic trends, investment opportunities, and corporate vulnerabilities. Reggie won the CNBC's stock draft consecutively for two years, and appeared on major financial news networks like CNBC, BBC and Bloomberg where he discussed market trends, his forecasts, and the implications of financial strategies adopted by major firms. His track record has undeniably positioned him as a significant voice in the financial commentary space.

Reggie's work gained public attention when he appeared on the Keiser Report and CNBC in 2014, premiering his innovations built on the Bitcoin blockchain called "Ultracoin", two years before Ethereum captured the crypto limelight.

His vision was to create sound markets for a financial ecosystem where loans could be issued without banks, trades executed without exchanges, and contracts enforced without lawyers, aiming to disintermediate traditional finance by removing the middleman that doesn't add value.

In 2014, Reggie pioneered a simple Apple trade using a Pure Bitcoin Wallet: The Ultracoin Client.

Ultracoin later renamed VERI short for “Veritaseum” meaning "of truth", was the

first to market in tokenizing precious metals, offering VeGold, VeSilver and even tokenized fiat currencies or so called "Stablecoins". Veritaseum also introduced VeRent creating yield through P2P lending, and the revolutionary VeADIR platform, an autonomous, blockchain-powered research platform that independently evaluates and acts on dynamic research in real-time, communicates in machine language, and operates by purchasing, analyzing, and distributing insights on various assets while allowing VERI token holders to access and trade this research.

In 2018 he created the worlds first Gold Denominated Blockchain Mortgage

with traditional written note, mortgage as well as a smart contract on a public blockchain, both of whom incorporate each other by reference. The transaction had traditional title insurance and the note was recorded with the county clerk. The mortgage was denominated in Veritaseum's VeGold product, a digital form of gold in bearer form, fully transferable and redeemable upon demand.

Merely a few examples of groundbreaking products offered by Veritaseum.

Coinbase's Challenge: The Patent Infringement Suit

Coinbase, a dominant force in the cryptocurrency exchange market, enlisted the services of Perkins Coie, one of the largest patent law firms, to contest the validity of Reggie Middleton's patents.

They launched an Inter Partes Review (IPR) at the Patent Trials and Appeals Board (PTAB), arguing that Middleton's patents lacked novelty. An overwhelming 85% of patents are invalidated through this process. However, Coinbase's challenge was denied along with the appeal, thereby upholding and strengthening the validity of Reggie's patents.

This IPR challenge came after Veritaseum sued both Coinbase and Circle USDC for $350 million each over patent infringement. Unfortunately, Reggie's patent attorney and close friend passed away during this suit, so the cases has been dismissed without prejudice, meaning they can be negotiated or the cases reopened at any time. This leaves Coinbase in a precarious position, especially if shareholders have not been properly informed of this risk.

This lawsuit details how Coinbase's infrastructure, specifically its Ethereum and Solana validator nodes, engage with client devices to facilitate transactions. Exhibit #3 meticulously outlines the patent's claims, detailing the roles of computing devices, the use of memory for key pair storage, network interfaces for transaction terms, and the generation and dissemination of transaction data records. It provides concrete examples such as the processing of NFT transactions on Ethereum and the management of transaction fees on Solana, supported by in-depth references to code and API interactions. Furthermore, the exhibit explains the verification of transactions through an external state, illustrating how Coinbase's technology aligns with the patent's principles for decentralized transaction processing without a central authority.

SEC's Intervention: A Turning Point

In 2019, with promising negotiations on the horizon with both the Jamaican and the Nigerian Stock Exchanges for digital asset platforms, Reggie's world was turned upside down.

The SEC accused Reggie of fraud, alleging he misled investors about the functionality of Veritaseum's VeADIR platform, which the SEC ordered to be shut down following a live demonstration. The SEC also made claims on the validity of Reggie's patent applications, which have since been approved by both the USPTO and the Japan Patent Office. Oddly enough, the SEC may actually infringe on these very patents through the disgorgement and storage of seized crypto tokens.

Despite Veritaseum's cooperation with the SEC over a two-year period, along with a detailed response addressing the SEC's allegations, and not one token holder claiming to be defrauded, these allegations still led to a Temporary Restraining Order (TRO) that froze millions in assets, destroying the company's operations, and forcing a consent judgment "neither confirming or denying the allegations". The SEC would top it all off with a gag order that barred Reggie from publicly discussing the matter.

Keep in mind, the SEC is claiming jurisdiction by calling Utility Tokens "Digital Asset Securities" but recently SEC Commissioner @HesterPeirce stated:

"...by using imprecise language we've been able to suggest the token itself is a security, apart from that investment contract, which has implications for Secondary Sales, it has implications for who can list it...

We've fallen down on our duty as a regulator not to be precise. So, tucking into a footnote that yes we admit that now that the TOKEN ITSELF IS NOT A SECURITY, that is something we should have admitted long ago and then started wrestling with the difficult questions."

This calls into question if the SEC even had jurisdiction to bring forth this case to begin with. The Veri Community would later challenge the SEC's unproven allegations against Reggie with

a Dossier supporting the Vacating or Setting Aside of this case, and suggesting possible misconduct by the SEC.

Allegations of SEC Misconduct:

Misrepresentation of Facts: Assertions that the SEC deliberately mischaracterized the
functionality of the VeADIR platform, along with the patents and their value, by labeling them as lacking novelty and part of fraudulent activities.
Misleading Evidence: The SEC's use of declarations from Patrick Doody and Roseann Daniello, which contained misleading information about the personal ownership of a Kraken account used to misappropriate funds. Doody would later correct his statement, but the SEC did not update the court with this new information, potentially misleading the judicial process.
Conflict of Interest: Doody's undisclosed financial interests in the digital asset space through Lily Pad Capital LLC could suggest a bias in his testimony, which was pivotal in obtaining the TRO.
Coercion and Intimidation: Witnesses like Lloyd Cupp and John Doe provided affidavits claiming coercion by SEC attorneys to alter their testimonies, pointing towards witness tampering and intimidation.

FOIA Responses: The SEC's FOIA department initially denied any communications with Kraken, only later admitting to subpoena issuance, suggesting an attempt to obscure facts.
RICO Allegations: A 95 page RICO Dossier, supported by extensive evidence, alleges that the SEC's actions could resemble an organized crime syndicate, with systemic coercion, misrepresentation, and procedural misconduct aimed at Reggie Middleton.
Bar Complaint: The Veri community lodged a Bar Complaint against the SEC's Lead Attorney
over the use of misleading evidence, coercion and intimidation of witnesses.

Summary Articles of the B ar Complaint and RICO Dossier

Comparisons with the SEC Misconduct in the DEBT Box Case

The DEBT Box case shares a troubling parallel with the Veritaseum case. In both cases a Temporary Restraining Order (TRO) freezing funds was issued using dubious evidence which suppressed the ability to defend themselves. This behavior was already admonished by five US Senators

in a letter to Commissioner Gary Gensler in which the SEC presented misleading claims in this now high-profile cryptocurrency case.

"Regardless of whether Commission staff deliberately misrepresented evidence or unknowingly presented false information, this case suggests other enforcement cases brought by the Commission may be deserving of scrutiny. It is difficult to maintain confidence that other cases are not predicated upon dubious evidence, obfuscations, or outright misrepresentations."

Given the similarities in alleged procedural misconduct between the cases, it raises systemic questions about the SEC’s litigation approach in cryptocurrency matters.

This parallel underscores a potential agency-wide issue that could involve either implicit biases against crypto companies or an explicit strategy to pursue aggressive, potentially misleading tactics in court.

Is The Fox Guarding the Hen House?

In a significant development, the Attorney Grievance Committee (AGC) has decided to forward a complaint against SEC attorney Jorge Tenreiro to the SEC's Office of General Counsel (OGC) for investigation. This controversial move suggests a potential conflict of interest, given that the OGC is part of the SEC, the very agency where Tenreiro was recently promoted to Chief Litigation Counsel. The complaint, filed by the Veri community, accuses Tenreiro of misconduct including alleged coercion, witness tampering, and misrepresentation during SEC investigations. The Veri Community argues that this decision undermines the integrity of the legal process, as the OGC's role is to provide legal advice and defend the SEC, not to independently investigate its own employees. This raises questions about the impartiality and transparency of the disciplinary process for attorneys, especially when it involves high-profile figures like Tenreiro.

"As noted in re Rowe, 80 N.Y.2d 336 (1992), the public’s confidence in the legal profession depends on transparent and impartial disciplinary processes. Delegating oversight to the SEC, where Mr. Tenreiro remains a senior official and where the OGC has a clear institutional stake, jeopardizes this confidence and risks the appearance of protectionism.”

The VeriDAO has submitted a response letter to the AGC along with creating a PDF generator
to help the estimated 100 complainants and anyone else interested in requesting the AGC to reconsider this action.

Legal and Judicial Trials

The legal battles would only continue for Reggie. The case of Hall v. Middleton, in which Hall, a 1% shareholder sued Reggie, raises concerns of judicial bias and procedural mishandling. In this case, Reggie was denied Due Process and barred from presenting crucial evidence or calling witnesses due to his former attorneys' "Office Failures" that missed deadlines to submit evidence without the knowledge of Reggie or the firm Brundidge & Stanger that outsourced his counsel as detailed in their affirmations.

"In my many years of practice it is a rare instance where I have witnessed an attorney intentionally not file critical documents as required by Court Order without the permission or knowledge of his client, who had an established and fully developed attorney client-relationship with said attorney, and then misrepresent that the requirements of the Court Order were being satisfied. This is one of those instances and I hope not to see another."
~ Carl Brundidge

The judge ruled that Reggie must:

Pay a $1M fine to his company Veritaseum Inc., in which he owns 99%
The plaintiff was awarded costs of $495k against Veritaseum Inc.
The Judge ordered Patents (filed before the creation of Veritaseum Inc.) to be assigned to the company without compensation.

Attorney's "Office Failures":

Sheridan England missed critical deadlines, resulting in the striking of exculpatory evidence. England’s inaction or inadequate defense exacerbated Middleton’s legal vulnerability, directly leading to adverse outcomes.

Judge Schecter’s Conduct:

Ignoring Exculpatory Evidence: Despite knowledge of its existence, Schecter struck Middleton’s post-trial memorandum.
Procedural Bias: The judge’s decisions systematically favored Hall, including allowing him to collect attorney fees from Middleton personally, contrary to the principles of derivative law.
Forced Patent Transfers: Schecter’s order to transfer patents to an underfunded entity (Veritaseum) which were court restrained by the same judge, rendering them defenseless against attacks and IP theft.

This ordeal was compounded when Reggie was held in Contempt for using personal funds (while Veritaseum’s funds were court-restrained) to successfully defend his patents against an IPR challenge by Coinbase in the PTAB of the USPTO in an attempt to invalidate these patents. The Forced Patent Expropriation to Veritaseum without compensation or the ability to defend them could be seen as coordinated as it benefited very large competitors seeking to avoid licensing fees or infringement claims, or possibly even IP Theft.

Judicial Complaint: A formal complaint has been filed with the NYS Commission on Judicial Conduct by the Veri Community.

ETHgate: The Broader Conspiracy Allegations

Parallel to Middleton's struggles, "ETHgate" emerged, involving allegations by Ethereum co-creator @StevenNerayoff. Nerayoff claimed a government conspiracy aimed at controlling or monopolizing cryptocurrency development by targeting key figures. This narrative suggested that by attacking innovators (like Reggie Middleton as the Veri Community contends), the SEC might have indirectly cleared a path for Ethereum, which, despite its decentralized claim, benefited from a regulatory environment less scrutinized than its competition.

The term "ETHgate" encapsulates the belief that Ethereum's "Free Pass" from regulatory scrutiny might not just be due to its technological merits but also due to strategic regulatory maneuvers, where attacking smaller or less established DeFi projects could safeguard larger, more influential platforms like Ethereum.

Back in 2021, @JohnEDeaton1 from @CryptoLawUS explained XRP's side of Ethereum's "Free Pass". More recently, further SEC RICO Claims are insinuated in "RIGGED from the start" a documentary by @Fruition_News , along with posts by @KuwlShow and the XRParmy involving the SEC, Ethereum, a16z, and Consensys surrounding the Bill Hinman speech. Active FOIA requests by @EleanorTerrett seek to shed light on meetings between Hinman and Ethereum members.

Given the SEC protection of ETH and the high probability of Ethereum infringing on Reggie Middleton's patents as meticulously detailed in Exhibit #3 of the Coinbase case, is it ridiculous to believe Reggie Middleton could have been targeted?

Community Support: The Backbone of Resilience

Despite the SEC's narrative labeling them as "The Defrauded," the Veritaseum community rallied around Reggie.

SmartMetal with embedded NFT avalaible through VeriDAO.io

Financially devastated and with his funds frozen, Reggie faced foreclosure and was threatened with jail time after contempt charges for defending his patents using personal funds. In a remarkable show of support, the Veri Community rallied, raising an impressive $149,000 in less than two weeks to cover the fine while the case is under appeal.

They funded legal battles largely through donations and more recently with innovative means like NFT silver rounds called SmartMetal using Reggie's patented technologies, underscoring their belief in his vision. The first minted round was auctioned off for an astonishing $14,000 won by "M S"

"There is no better witness to the veracity of any defense than the alleged defrauded defending the alleged fraud at their own expense"
~ The Veri Community

This community support was not just financial but also moral, with efforts such as an Amicus Brief in the case against XRP, a No Action Letter (NAL) seeking clarity on secondary market sales of tokens, a Bar Complaint against the SEC's newly promoted Chief Litigation Counsel, and the @dao_veri's

#ProjectSunlight The SEC RICO Revelation.

A Call for a New Regulatory Paradigm

Reggie Middleton's saga is emblematic of the challenges faced by pioneers in the blockchain and DeFi arenas. His patents, now granted, underscore their foundational nature, yet the path to their recognition was marred by legal battles, suggesting a systemic issue where the regulatory framework might not fully comprehend or support emerging tech. His resilience, supported by an unwavering community and the validation of his intellectual property, underscores the need for a regulatory environment that fosters rather than stifles innovation. As blockchain technology continues to evolve, Reggie's story serves as a critical reference for balancing innovation with legal and ethical governance, ensuring that the future of finance remains open to all, not just those with the resources to navigate the legal maze.

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