Japan FinTech Observer

March 19, 2024

Will they, or won't they? The Bank of Japan's Monetary Policy Meeting (MPM) will publish its rate decision on Tuesday, although, if you are reading the Nikkei, you would be forgiven to believe the decision has already been made (the BoJ has as many leaks as a long-abandoned akiya).

Similar to the Nikkei extending beyond the bubble high, and cracking 40,000, any BoJ move in March (or April) will be largely symbolic and not change the mid-term path for Japanese interest rates. NIRP will end, and the range for short-term interest rates move from between -0.1% and 0% to between 0% and 0.1%. Expect an upper range of 0.25%, or possibly 0.5% by the end of the year.

FX markets did not budge. The JPY/USD exchange rate is set by the Fed, and not the Bank of Japan, having moved from the lower 140s at the end of last year, when economists were expecting up to six Fed rate cuts, back close to 150 now that the consensus seems to settle on three.

Here is what we are going to cover this week:

Venture Capital & Private Markets: Decima has completed a funding round of 4.5 billion yen for its fund jointly managed with gumi, MZ Cryptos, SBI Holdings, and Animoca Brands; Integral Corporation announced the first closing of “Fund V Series” at JPY 180 billion raised; M&A Cloud has raised a total of 1.25 billion yen through debt financing from Kiraboshi Bank, Shizuoka Bank, Japan Finance Corporation, Mizuho Bank, Sumitomo Mitsui Banking Corporation, and Fivot (Flex Capital); Hyperithm has invested in Superfluid
Green Finance: FANPS (Sumitomo Mitsui Financial Group, MS&AD Holdings, Japan Finance Corporation, Norinchukin Bank) has established a platform to accumulate knowledge related to "nature positive"; Carbon EX, a 50/50 joint venture between ASUENE and SBI Holdings, demonstrates strong growth; Hitachi, in collaboration with Persefoni Japan, has developed a green house gas (GHG) emissions calculation service
Insurance: international InsurTech bolttech has partnered with refurbished device marketplace Back Market for one of its first commercial launches in Japan; Dai-ichi Life acquire a 19.9% strategic minority stake in Canyon Partners; AXA Life Insurance and AXA Direct Life Insurance merge
Banking: an alliance of Airbnb, ORICO, and Akikatsu, is aiming at promoting the effective utilization of vacant homes through ORICO-guaranteed loans from regional financial institutions; Hokkoku Financial Group plans to build a fully cloud-based acquiring system in collaboration with Visa and Infcurion
Payments: Wise Payments Japan has obtained a Type 1 license as a Money Transfer Operator; the Japanese government is reportedly in discussions with Southeast Asian countries about sharing QR code payment services; PayPay, PayPay Bank, and PayPay Securities launched a simplification of account opening procedures
Capital Markets & Asset Management: Japanese securities firms stepping up support for startups; Nomura has realigned the firm’s collective asset and investment management capabilities in the Americas; Matsui Securities has selected Broadridge Financial Solutions' cloud-based SaaS post-trade processing solution for its stock lending business
Digital Assets: TIS has started a collaboration with Umi Labs, integrating web2 and web3 technologies on the Sui Network; Sony Bank announced the release of “Sony Bank CONNECT” in summer 2024, aiming to contribute to the expansion of the creator and fan economy in the web3 era; KDDI, STYLY, monoAI technology, and REALITY XR cloud announced the launch of the “Open Metaverse Network”

Venture Capital & Private Markets

Decima GP Limited has completed a total funding round of approximately 4.5 billion yen for Decima Fund; the Fund was established with the purpose of incubating domestic projects aiming for overseas expansion and overseas projects aiming to enter the Japanese market, as well as investing in listed tokens; the Fund will be jointly managed with GPs that have expertise in the Web3 domain, including gumi, MZ Cryptos, SBI Holdings, and Animoca Brands
Integral Corporation announced the first closing of their new funds, the “Fund V Series”, with several domestic and foreign investors participating, and approximately JPY 180 billion raised; the final Capital Commitment goal is more than JPY 200 billion for the Fund V Series, expected to be completed during 2024
M&A Cloud has raised a total of 1.25 billion yen through debt financing from Kiraboshi Bank, Shizuoka Bank, Japan Finance Corporation, Mizuho Bank, Sumitomo Mitsui Banking Corporation, and Fivot (Flex Capital); the funds raised will be invested in hiring to strengthen the organization, as well as in marketing to expand the advisory business and the matching platforms “M&A Cloud” and “Funding Cloud”
Hyperithm has invested in Superfluid, an Ethereum-based token streaming protocol that enables real-time crypto transfers; Superfluid is a revolutionary asset streaming protocol that brings subscriptions, salaries, vesting, and rewards to DAOs and crypto-native businesses worldwide
Deerpath Capital, one of the largest providers of customized, cash-flow based senior debt financing to lower middle market companies across North America, announced the opening of its latest international office in Tokyo

Green Finance

FANPS has established a platform to accumulate knowledge related to "nature positive" through industry-academia cooperation and is working to support companies in achieving that goal; FANPS comprises members centered around Sumitomo Mitsui Financial Group, MS&AD Holdings, Japan Finance Corporation, Norinchukin Bank, and their affiliated think tanks, as well as collaborations with researchers in related specialized fields such as ecology
The number of registered buyer and seller companies on Carbon EX, a 50/50 joint venture between ASUENE and SBI Holdings, has exceeded 900; additionally, the available trading volume of domestic and international carbon credits on Carbon EX has reached approximately 5 million tons; Carbon EX facilitates the sale and purchase of various credits, including voluntary carbon credits, J-Credits, non-fossil certificates, and overseas renewable energy certificates
Hitachi, in collaboration with Persefoni Japan, has developed a green house gas (GHG) emissions calculation support service for investment/lending targets at financial institutions to assist in calculating financed emissions (GHG emissions from investment/lending targets); this will be provided by Hitachi as an additional offering for the environmental information management service utilizing EcoAssist-Enterprise

Insurance

International InsurTech bolttech has partnered with leading refurbished device marketplace, Back Market; the partnership, which marks one of bolttech's first commercial launches in Japan, will deliver embedded device protection to Back Market's customers through a seamless online experience
Canyon Partners, a $24 billion global alternative investment manager, announced that Dai-ichi Life Holdings has agreed to acquire a 19.9% strategic minority stake in the Canyon business; Under the terms of the agreement, Dai-ichi has the right to acquire up to 51% of the equity interest in Canyon in 2027 and up to 100% in 2029
The FSA has given approval to AXA Life Insurance and AXA Direct Life Insurance for the merger of the two companies based on the provisions of Article 167, Paragraph 1 of the Insurance Business Act, under the name AXA Life Insurance, a 100% subsidiary of AXA Holdings Japan
On the occasion of InsureTech Connect Tokyo last week, Plug and Play have released their Japan "Insurtech Report 2024"

Banking

Accenture has published its take on Aozora Bank's US commercial real estate exposure and the overall Japanese banking sector in its February 2024 macro economic brief; we have previously reported on Aozora's earnings adjustment for this fiscal year in the Japan FinTech Observer
An alliance of Airbnb, ORICO, and Akikatsu, is aiming at promoting the effective utilization of vacant homes; users of the web information platform “Akikatsu Navi,” which matches vacant homeowners with prospective buyers, will be able to obtain a “Home Sharing Loan” when purchasing or renovating a vacant home for the purpose of home sharing; the “Home Sharing Loan” is an unsecured loan or small business loan with high convenience to meet a wide range of funding needs related to personal and corporate home sharing operations; the loan limit is expected to range from 500,000 yen to 1,000,000 yen, with a maximum repayment period of 5 to 10 years; ORICO will guarantee the loans from regional financial institutions
Hokkoku Financial Group announced the initiation of building a full cloud-based acquiring system in collaboration with Visa Worldwide Japan and Infcurion; this system is equipped with functions necessary for acquiring operations such as authorization, clearing, merchant settlement and management, and connections to payment centers and international brands, for the latter of which Hokkoku FG will be the first domestic company to utilize “Visa Cloud Connect”

MUFG's new headquarter building, to be opened in 2029

Payments

Wise Payments Japan has obtained a Type 1 license as a Money Transfer Operator from the Financial Services Agency of Japan; Wise is one of the first foreign international financial service companies to obtain this license (Nium reported obtaining such license on March 1), which enables transfers of up to 150 million yen to over 50 countries (including US dollars, British pounds, euros, and Australian dollars) using the mid-market rate with no hidden costs
The Japanese government is reportedly in discussions with Southeast Asian countries about sharing QR code payment services; the potential linkages will let Southeast Asian travelers use their homegrown payment apps for transactions in Japan – and vice versa
PayPay, PayPay Bank, and PayPay Securities launched a simplification of account opening procedures; if a user has completed identity verification (eKYC) with PayPay, the mini apps “PayPay Bank” and “PayPay Asset Management” within the cashless payment service, “PayPay” now offers a service that allows skipping of some of the procedures required to open an account, such as ID verification documents and taking a selfie

Capital Markets & Asset Management

Japanese securities firms stepping up support for startups
Nomura Holdings has realigned the firm’s collective asset and investment management capabilities in the Americas under the new brand Nomura Capital Management (NCM); NCM is a subsidiary of Nomura Holding America (NHA) and will integrate Nomura Group’s public and private credit offerings to maximize the firm’s growth opportunities and to better serve institutional and intermediary clients in the Americas
Matsui Securities has selected Broadridge Financial Solutions' cloud-based SaaS post-trade processing solution to drive operational efficiency in its stock lending business; system integrator Intelligent Wave will develop the front office component and system integration as well as provide project management and overall consultation to Matsui Securities
Asset manager Franklin Templeton has appointed, effective April 1, Takashi Takamura as the president and country head of Japan, reporting to Tariq Ahmad, head of Asia-Pacific, with responsibility for leading the firm’s retail and institutional business in Japan
Nomura has published its "Individual Investor Survey March 2024"

Digital Assets

TIS has started a collaboration with Umi Labs Japan from March 2024, aiming for social implementation by integrating web2 and web3 technologies utilizing zero-knowledge proofs, decentralized ID/VC/VP, and OAuth on the Sui Network; in this collaboration, TIS will be responsible for planning, design, and production, while Umi Labs Japan will take charge of technology research and development, with the goal of creating new markets
Sony Bank announced the release of “Sony Bank CONNECT” in summer 2024, aiming to contribute to the expansion of the creator and fan economy in the web3 era; users will be able to enjoy digital content such as NFTs previously distributed by Sony Bank through campaigns, and digital content to be presented to customers who purchase Sony Bank’s digital security “US Dollar-Denominated Green Finance Security Token (№1 of 2024)”
KDDI, STYLY, monoAI technology, and REALITY XR cloud announced the launch of the “Open Metaverse Network,” Japan’s largest metaverse alliance that connects multiple metaverse platforms; this alliance enables companies and municipalities considering business utilization of the metaverse not only to use a single metaverse platform but also to connect multiple metaverse platforms and incorporate real-world spaces for multidimensional project planning; it offers comprehensive services, from consulting for smooth implementation and solving business challenges to event planning and spatial content production

In the Region

We have published the first edition of the "Korea FinTech Observer" as we have seen sufficient news flow crossing our desk; we might aim to release the Korea coverage twice per month

We have taken a deep dive into the startup support programs the HKSTP - Hong Kong Science and Technology Parks Corporationoffers; Connie Guoprovided a comprehensive account of HKSTP offers for startups and investors; the recording is available on our YouTube channel

The 136th episode of the eXponential FinancePodcast features Arthit (T) Sriumporn, Founder & Chief Executive of Rakkar Digital, a digital asset custodian; you can find the podcast on all major platforms, or through our Podlink

Have an awesome week ahead.

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thedinarian@thedinarian

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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