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Motion to Vacate Alleging Fraud Upon the Court in SEC v Reggie Middleton et al
March 17, 2025
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Will the SEC Defend Its Alleged Fraud?

Motion to Vacate Puts Crypto Oversight on Trial

On March 13, 2025, Reginald Middleton, founder of Veritaseum, filed a Motion to Vacate the Consent Order and Judgment in SEC v. Reggie Middleton et al., alleging fraud upon the court by the SEC. A letter from his attorney, Franklin Jason Seibert, requested a delay in the SEC’s briefing schedule—originally set for opposition papers by March 14 and replies by March 21—until after the motion’s ruling, with new deadlines two weeks and one week post-disposition, respectively.
 
The modified schedule order (DOC-106) required filings as follows:
  • March 14, 2025: opposition papers, if any, are served on the SEC
  • March 21, 2025: reply papers, if any, must be served by the SEC
The revised scheduling order, as stipulated, would be as follows:
  • Two weeks after disposition of Defendants’ FRCP 60(d)3 motion to vacate Consent Order and Judgment (DOC-61) for Fraud Upon the Court: opposition papers, if any, are served on the SEC;
  • One week later: reply papers, if any, must be served by the SEC

The question now becomes, will the SEC defend "Fraud Upon the Court?"

Digital Asset Securities

The SEC “regrets any confusion” caused by its characterization of these tokens as “crypto asset securities” and “no longer uses the shorthand term,” according to the Sept. 12 filing. Yet, this term was used to claim jurisdiction over the crypto industry raising questions over past cases, including that of Reggie Middleton.

"...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..." ~ SEC Commissioner @HesterPeirce

Tom Emmer @GOPMajorityWhip would later introduce the "Security Clarity Act" further questioning the SEC's jurisdiction over some cases.
 
What's even more suspicious, is the VERI token was mentioned about 150 times in the SEC's original complaint but the VERI Token was not mentioned once in the Final Judgment, which begs the question. Is the SEC deliberately hiding any reference to the VERI Token, just as they hid "The SEC is not referring to the crypto asset itself as a security" in a footnote of the Binance case? This becomes a little more questionable when the SEC refused to issue a written reply to the No Action Letter submitted by Jeremy Hogan and the VeriDAO.
 

The SEC's Smoking Guns: Fraud on the Court Allegations

1 - Falsely Claimed Patents were "not novel", "stalled" and would never be granted, claiming Reggie "misled investors about the status of Veritaseum’s IP". A total of 7 patents have since been granted with 3 in the US (US11196566B2, US11895246B2, US12231579) and 4 in Japan (JP6813477B2, JP7204231B2, JP7533974B2, JP7533983B2). These patents titled "Devices, systems, and methods for facilitating low trust and zero trust value transfers" are foundational to DeFi, Tokenized Assets, NFT's, Stablecoins, Proof of Stake and Proof of Work.

Coinbase filed a IPR2023-00751 in an attempt in invalidate these patents. The USPTO upheld the patents denying the IPR challenge based on "lack of merit" further strengthening the validity of the patents
 
2 -VeADIR Platform Functionality - a live demonstration was performed in front of SEC staff and days later Reggie was told to shut it down, Tenreiro then claimed the platform was not functional. VeTest Channel on YouTube has videos that prove the functionality but as shown in his affidavit, the owner was threatened by Tenreiro "...the line of questioning quickly turned aggressive, abusive and threatening" and told to cease making videos "...through threats of multiple felony charges against me for supporting Mr. Middleton, testing his software and publicizing the results through my YouTube Channel".
 
3 - Misrepresented Ownership of Kraken Corporate Account as Personal - Jorge Tenreiro failed to correct the record after expert witness Patrick Doody corrected his statements "I understand now that the account is titled in the name of Veritaseum LLC", found on the last page of his 2nd declaration. Also detailed on page 20 of the SEC RICO Dossier
 
Reggie Middleton a NY resident points out that Kraken is not licensed to do business in NY making it impossible for him to have a personal Kraken account as found on Krakens Support page under Geographic Restrictions.
 
4 - Misrepresentation of Asset Flow - by falsely alleged vast sums of money were flowing into Middleton’s personal account, misleading the court about asset misappropriation of funds. This point becomes moot as the account is proven to be a Corporate account as evidenced in point #3 and also in a 423 page reply to the TRO.
 
5 - False Allegation Regarding Agreements - alleging the defendants were merely negotiating deals with the Jamaican Stock Exchange (Memorandum of Understanding) and Nigerian Stock Exchange(Joint Venture Agreement), when signed agreements were already in place. The SEC's aggressive and actions caused the cancellations of these agreements. FOIA request have been submitted seeking communications between the SEC and the JSE.
 
6 - Misrepresenting Trading Activity on Etherdelta - as manipulation when it was publicly announced prior as a liquidity test of the new platform also found on page 49 Veritaseum's reply to the TRO Testing EtherDelta as a method of distributing post-Offering Veritas tokens. Anyone interested in buy VERI please visit https://etherdelta.github.io and let me know”
 
7 - Misrepresentation of CEO Payments - falsely misrepresented that $1.7 million in periodic payments to Middleton over 27 months (about 2 and a half years), was dissipation of assets, misleading the court about CEO compensation. this is detailed on page 55 of the SEC RICO Dossier.
 
8 - Nature of International Payments -The SEC's TRO action misrepresented payments to overseas contractors as asset dissipation. Daneillo would later correct her findings to show they were in fact payments to overseas contractors. The SEC continued to imply that the payments were part of an effort to hide assets to thwart judgment relief, which is clearly a disingenuous characterization (SEC Memo of Law in Further Support of TRO).
 
9 - Unethical Conduct in No-Action Letter Request - Involved himself unethically in a No Action Letter (NAL) request meeting, breaching the SEC’s ethical separation as found in the Bar Complaint against Jorge Tenreiro.
 
10 - Harassment of VERI Token Holders - aggressively pursued VERI token holders to coerce them into giving evidence against Middleton, despite them stating they were not victims of Fraud. Victims of harassment have either come forth with notarized affidavits (Lloyd Cupp, John Doe) explicitly and verbosely describing the coercion, or have indicated fear of retaliation due to their treatment after interaction with Mr.Tenreiro.
 
11 - The sanctions against the SEC for lying to the Court to issue a Temporary Restraining Order in the Debtbox case further exemplifies the SEC's tactics in issuing TRO's. Quoted from a letter by Senator at the time JD Vance to Gary Gensler “It is difficult to maintain confidence that other cases are not predicated upon dubious evidence, obfuscations, or outright misrepresentations”. Parallels of the TRO issued in the Debtbox and that of Veritaseum.
 

Timeline of Events

Aug 19, 2019: All allegations against Reggie were addressed and rebutted in a strong
423 page reply to the SEC emergency TRO but days later the SEC would ignore the evidence provided and the TRO was granted regardless forcing a Consent Order and Final Judgment
 
March 10, 2021: Jorge Tenreiro argued the SEC's case against Ripple’s Christian Larsen for aiding and abetting unregistered securities sales was valid, highlighting Tenreiro's aggressive enforcement approach.
 
Oct 13, 2022: SEC v Middleton Case Information claiming he harmed investors yet no token holders came forth as witnesses for the SEC.
 
March 2024: “Gross Abuse of Power” US Court SEC for Misrepresenting Evidence to obtain a TRO against Debtbox. US Court Memorandum Decision and Order. An analysis comparing this to the SEC's TRO against Veritaseum can be found on page 42 of the SEC RICO Dossier.
 
Sept 2024 - SEC v Binance - Footnote states Token itself is not a security.
 
Oct 4, 2024: A Bar Complaint was filed against Jorge Tenreiro by the VERI Community.
 
Oct 31, 2024: A 96 page SEC RICO Dossier supported by over 1800 pages of evidence was also released by the VERI Community.
 
Dec 6, 2024: The Attorney Grievance Committee forwarded the Bar Complaint back to the SEC OGC. The VERI Community issues a letter to the AGC asking it to reconsider investigating the complaint.
 
Jan 2025: SEC admits in a footnote "that a token itself is not a security" revealing that "Digital Asset Securities" is a made up term used to claim jurisdiction over digital assets https://x.com/SovereignRiz/status/1881316167987388904
 
March 9, 2025 - Tom Emmer introduces the "Securities Clarity Act" stating Tokens are separate from an investment contract.
 
Feb 5, 2025: Tenreiro has since been reassigned to the IT Dept. WSJ Article "SEC Ousts Top Litigator Who Battled with Crypto Giants"
 
 
 

Other Articles exploring this topic in more detail

 
 
 

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