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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

 
 
 

Source links:

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🚀Comprehensive Overview of Reggie Middleton's Patents
Pioneering Innovations in Decentralized Finance and Blockchain Technology

Key Takeaways

  • Innovative DeFi Solutions: Reggie Middleton has developed groundbreaking technologies that facilitate trustless and low-trust value transfers, revolutionizing decentralized finance.
  • Robust Patent Portfolio: His patents cover a wide range of applications, including blockchain infrastructure, peer-to-peer transactions, digital asset security, and regulatory compliance.
  • Legal and Market Impact: Middleton's patents have significant legal standing, demonstrated by successful defenses against challenges and high-profile lawsuits, positioning him as a key player in the FinTech industry.

Introduction

Reggie Middleton is a distinguished innovator in the fintech and blockchain sectors, recognized for his extensive portfolio of patents that address critical challenges in decentralized finance (DeFi) and trustless value transfers. His work has been instrumental in advancing blockchain technology, enhancing security, scalability, and accessibility within decentralized ecosystems.

Overview of Reggie Middleton's Patent Portfolio

Trustless Value Transfer Systems

Middleton's patents in this category focus on enabling secure transactions between parties with minimal or no trust. Utilizing advanced cryptographic protocols and blockchain technology, these systems eliminate the need for intermediaries, thereby reducing costs and increasing transaction efficiency.

Mechanisms and Applications

His innovations include systems for decentralized exchanges, peer-to-peer lending platforms, and digital marketplaces. An exemplary application is the facilitation of currency exposure hedging, allowing users to swap risks (e.g., AUD/USD) via Bitcoin without prior trust between parties.

Blockchain Infrastructure Enhancements

Middleton has developed solutions that address scalability, interoperability, and consensus mechanisms within blockchain systems. These enhancements are crucial for handling high transaction volumes and ensuring seamless interaction between different blockchain networks.

Key Innovations

His patents introduce scalable blockchain infrastructures capable of supporting enterprise-level applications and multi-chain platforms. By improving consensus algorithms, Middleton's work ensures faster and more secure transaction validation processes.

Peer-to-Peer Transactions

The patents in this domain enable direct asset exchanges, such as cryptocurrencies and non-fungible tokens (NFTs), through smart contracts and decentralized networks. These innovations are foundational for modern DeFi platforms and decentralized governance systems.

Practical Implementations

Middleton's technologies facilitate seamless peer-to-peer transactions, enhancing user autonomy and reducing dependency on centralized institutions. This is particularly evident in decentralized exchanges and governance frameworks where direct asset management is paramount.

Digital Asset Security

Ensuring the security of digital assets is a cornerstone of Middleton's patent portfolio. His solutions include advanced storage systems and multi-signature wallets designed to protect against cyber threats and unauthorized access.

Security Solutions

Implementing cold storage systems and multi-signature protocols, Middleton's patents provide robust defenses against potential security breaches, safeguarding cryptocurrencies and other digital assets from malicious attacks.

Regulatory Compliance and Central Bank Digital Currencies (CBDCs)

Middleton's patents also address the growing need for regulatory compliance within digital financial systems. His frameworks for issuing and managing CBDCs align with existing regulatory standards, facilitating the integration of government-backed digital currencies into the broader financial ecosystem.

Compliance Frameworks

These technologies ensure that digital currency systems adhere to legal requirements, enabling smoother adoption and acceptance by both financial institutions and regulatory bodies.

Legal and Market Impact

 

Patent Enforcement and Legal Challenges

Reggie Middleton has actively defended his intellectual property, most notably filing a $350 million lawsuit against Coinbase Inc. for alleged patent infringement. The Patent Trial and Appeal Board (PTAB) has upheld the validity of his patents, denying Coinbase's Inter Partes Review (IPR) petition, thereby reinforcing the strength and enforceability of his patent claims.

Market Position and Influence

Middleton's patents are considered some of the most powerful in the FinTech industry, covering essential technologies that underpin DeFi and blockchain operations. With approximately 90% of blockchain patent applications typically rejected by the USPTO, Middleton's successful patents distinguish him as a leading innovator in the space.


Future Directions

Integration of AI in Decentralized Systems

While current patents focus on human-driven transactions, the foundational technologies developed by Middleton provide a robust framework for future integration of artificial intelligence (AI). Potential applications include automated trading systems, intelligent asset management, and enhanced decision-making processes within DeFi platforms.

Expansion into Global Markets

With patents protected in multiple jurisdictions, including the U.S. and Japan, Middleton is well-positioned to expand his technological solutions globally. This expansion will likely involve adapting his systems to comply with diverse regulatory environments and addressing region-specific financial challenges.


Detailed Patent Analysis

Technological Innovations

Middleton's patents encompass a range of technological advancements designed to enhance the functionality and security of decentralized financial systems. These include but are not limited to:

  • Proof of Stake (PoS) and Proof of Work (PoW) Enhancements: Improved algorithms for validating transactions and securing blockchain networks.
  • NFT Transfer Mechanisms: Secure and efficient methods for transferring non-fungible tokens, ensuring authenticity and ownership integrity.
  • Adaptive Security Protocols: Systems that dynamically adjust security measures based on transaction parameters and threat assessments.

Scalability and Interoperability

Addressing scalability, Middleton's patents introduce solutions that enable blockchain networks to handle increased transaction volumes without compromising performance. Additionally, his work on interoperability protocols facilitates seamless communication and transaction processing across different blockchain platforms, fostering a more integrated and efficient decentralized ecosystem.

Regulatory Alignment

In response to the evolving regulatory landscape, Middleton has developed frameworks that ensure digital financial systems comply with existing laws and standards. This alignment is crucial for the widespread adoption of decentralized finance solutions and the issuance of Central Bank Digital Currencies (CBDCs).

Conclusion

Reggie Middleton stands out as a pivotal figure in the FinTech and blockchain industries, with a patent portfolio that not only addresses current technological challenges but also lays the groundwork for future advancements in decentralized finance. His innovations in trustless value transfers, blockchain scalability, and digital asset security have significant implications for the financial ecosystem, reinforcing the importance of robust intellectual property in driving technological progress. Through sustained legal defense and strategic market positioning, Middleton continues to influence the direction and adoption of decentralized financial systems globally.

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⚖ SEC: many crypto staking services aren’t securities ⚖

The Securities and Exchange Commission (SEC) yesterday clarified that most staking services don’t involve securities, resolving a major uncertainty that has hung over the crypto industry. The guidance provides regulatory clarity for major platforms like Coinbase, Kraken, and Lido, which collectively handle billions in staked assets.

The ruling removes a regulatory cloud that has limited institutional adoption of staking services. Without this clarity, staking service providers faced potential enforcement action and costly compliance requirements designed for traditional securities.

Blockchain staking typically involves locking tokens to secure the network and earning a reward in return. The least contentious option would be someone who operates a node themselves, keeping custody of their assets and staking directly.

However, there’s been a major question mark hanging over staking-as-a-service, in which a third party performs the staking on behalf of the token owner. This is hugely popular because on Ethereum the minimum staked amount is 32 ETH (over $80,000 at current prices) and doing it yourself requires appropriate hardware and technical knowledge.

How the SEC reached its decision

For assets that aren’t obviously securities, the Howey legal test is used to establish whether there’s an “investment contract.” A key test is whether the return is dependent on the entrepreneurial efforts of someone other than the investor.

Applying this test to staking services, the SEC concluded that the staking service provider is simply providing an “administrative or ministerial activity” rather than an entrepreneurial one and doesn’t set the rate of return earned by the investor, although they deduct fees.

The SEC takes the same view whether the investor retains custody of their tokens or the service provider additionally provides custody. If a custodian is involved, the note only covers the situation where the investor chooses how much to stake.

However, the devil is in the details. For example, the opinion does not cover liquid staking (where the token holder receives another token while the main tokens are locked), re-staking or liquid re-staking.

One commissioner strongly disagrees

This interpretation faces significant pushback from Democrat Commissioner Caroline Crenshaw, who noted that these are simply staff opinions and don’t affect the law. She went as far as saying that in authoring the note, the Division of Corporate Finance was channeling the adage “fake it ’till you make it.”

In her view, the note inadequately justified the legal interpretation and she believes the conclusions conflict with the law. However, she acknowledged that certain bare bones staking programs may not involve an investment contract.

Since the change in administration, the SEC has published several staff notes related to digital assets, the first of which clarified that solo and pooled mining for proof of work blockchains will generally not be considered to involve securities.

While this is staff guidance rather than formal regulation, it signals the SEC’s likely enforcement approach under the new administration. It marks a significant shift in how crypto staking will be regulated, though the strong dissent suggests this interpretation could face challenges if the political landscape changes again.

The newly proposed digital asset legislation, the CLARITY Act, doesn’t explicitly cover staking. However, it includes explicit regulatory relief regarding blockchain-linked tokens, making such guidance less vulnerable to future political shifts by providing statutory protections for digital commodities that meet specific criteria.

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XRPL Unleashes Batch Power—What’s Hidden in the 2.5.0 Rollout?
XRPL prepares for its 2.5.0 upgrade, introducing batch transactions and advanced features to challenge Ethereum and Solana.

Highlights:

  • XRPL is preparing to release version 2.5.0 in June with several major feature upgrades.
  • The new XLS-56 feature allows users to group up to eight transactions in a single batch.
  • Batch transactions support atomic swaps and enable smart transaction dependency logic.
  • XRPL is also testing features like Account Permission Delegation and Dynamic NFTs.
  • Smart Escrows is currently being evaluated on the WASM Devnet for future release.

The XRP Ledger (XRPL) has confirmed integrating a major XLS-56 feature in preparation for the upcoming 2.5.0 upgrade. This release, scheduled for June, introduces batch transactions and supports future scalability. As XRPL aims to enhance performance, it moves to compete directly with Ethereum and Solana.

XLS-56 Brings Batch Transactions and Atomic Swaps to XRPL

XRP Ledger now includes the XLS-56 amendment, which enables users to group up to eight transactions in a single batch. This batch feature supports atomic swaps and smart transaction dependencies across the XRPL ecosystem. Consequently, it streamlines transaction processes and optimizes blockchain functionality.

Integrating batch transactions will support XRPL-based monetization and peer-to-peer NFT trading on a broader scale. With more efficient bundling, developers can execute advanced logic while keeping operational costs low. The upgrade demonstrates XRPL’s strategy to reduce complexity and promote seamless operations.

RippleX Senior Software Engineer Mayukha Vadari confirmed this integration through an announcement on X. She emphasized the technical breakthrough in batch processing in XRPL 2.5.0. After testing, the feature will be live once the amendment receives full validator approval.

Testing Begins for Next-Gen Blockchain Tools

Alongside batch processing, XRPL is testing additional features for phased deployment across the network. These include Account Permission Delegation, Multipurpose Tokens, Credentials, Permissioned Domains, and Dynamic NFTs. Each feature is being refined through XRP Ledger’s Devnet and Testnet environments.

The Devnet includes completed amendments that are still pending release, while the Testnet mirrors the mainnet for simulation. These networks allow developers to review feature behavior before final mainnet integration. This structured process ensures that XRPL can maintain reliability while deploying innovations.

Smart Escrows is another addition currently undergoing testing on the WASM-based Devnet. The tool aims to enhance asset handling with programmable conditions on XRPL. Once validated, this feature will expand XRPL’s smart contract capabilities.

XRPL Faces Competition from Ethereum and Solana in Upgrade Race

The XRP Ledger upgrade emerges when Ethereum prepares for its Pectra release and Solana advances with Alpenglow. Each platform is racing to improve network performance, though XRP Ledger focuses on reducing costs and enhancing functionality. Meanwhile, Ethereum and Solana prioritize scalability and speed.

XRPL’s approach includes integrating AI-powered tools like XRPTurbo to strengthen DeFi automation and utility. These enhancements position XRPL as a versatile ledger for financial and decentralized services. The upgrade aligns with long-term goals of supporting advanced applications and high-throughput demands.

XRPL continues to refine its core infrastructure with performance, modularity, and stability as key priorities. With XLS-56 now integrated, the ledger can support more complex transaction workflows. XRPL’s roadmap reflects a clear commitment to expanding use cases across its decentralized environment.

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