Case 1:19-cv-04625-WFK-RER Document 61 Filed 11/01/19 Page 1 of 19 PageID #: 2695

UNITED STATES
SECURITIES AND EXCHANGE COMMISSION
NEW YORK REGIONAL OFFICE Jorge G. Tenrelro
BROOKFIELD PLACE WRITER'S DIRECT DIAL
200 VESEY STREET. ROOM 400 TELBPHONB: (212) 336-9145
NEW YORK. NY 10281-1022 TcnrciroJ@scc.gov

October 31, 2019

Via ECF and UPS Overnight

Hon. William F. Kuntz, II

United States District Judge
Eastern District of New York
225 Cadman Plaza East
Brooklyn, NY 11201

Re: SEC v. Middleton et al., No. 19 Civ. 4625 (WFK..RER)

Dear Judge Kuntz:

Plaintiff Securities and Exchange Commission ("Commission") respectfully submits this

letter to inform the Court that the Commission and Reginald Middleton ("Middleton"),
Veritaseum, Inc., and Veritaseum, LLC ("Defendants") have reached a proposed settlement in
this case. Enclosed for the Court's consideration is a proposed judgment with respect to all
Defendants (the "Judgment") along with Defendants' executed consents to the Judgment.

The consent Judgment is fair and reasonable and in the public interest, in light of SEC v.
Citigroup Global Markets, Inc., 752 F.3d 285 (2d Cir. 2014). Among other things, the
Judgment: (1) permanently enjoins Defendants from committing additional violations of the
federal securities laws the Commission charged them with violating, including injunctions
against engaging in the unregistered offer and sale of securities and committing fraud in
connection with the offer, purchase and sale of securities, including market manipulation; (2)
permanently bars Defendants from engaging in any offering of digital securities; (3) provides for
the collection of over $9.4 million, comprised of disgorgement and prejudgment interest against
Defendants, and of a significant civil penalty against Middleton; and (4) establishes a fund with
the amounts collected from Defendants in satisfaction of the Judgment, so that the victims of
Defendants' fraud may be compensated.

If the Judgment is acceptable to the Court, we respectfully ask that the Court docket the
executed copy of it with the three enclosed consents attached. ·

-~:R0Sll=r
Jorge G. Tenreiro
Enclosures
cc (via ECF): Counsel for Defendants
Case 1:19-cv-04625-WFK-RER Document 61 Filed 11/01/19 Page 2 of 19 PageID #: 2696

UNITED STATES DISTRICT COURT

EASTERN DISTRICT OF NEW YORK
--------------------x
SECURITIES AND EXCHANGE COMMISSION,

Plaintiff, 19 Civ. 4625 (WFK) (RER)

- against- ECFCase

REGINALD ("REGGIE") MIDDLETON,

VERITASEUM, INC., and
VERIT ASEUM, LLC,

Defendants.

-------------------x
FINAL JUDGMENT AS TO DEFENDANTS REGINALD MIDDLETON,
VERITASEUM, INC., AND VERITASEUM, LLC

The Securities and Exchange Commission ("Commission") having filed a Complaint and

Defendants Reginald Middleton ("Middleton"), and Veritaseum, Inc. and Veritaseum, LLC

("Veritaseum," together with Middleton, "Defendants"), having acknowledged being served with

the Complaint and entered a general appearance; and having consented to the Court's jurisdiction

over Defendants and the subject matter of this action, consented to entry of this Final Judgment

without admitting or denying the allegations of the Complaint (except as to jurisdiction and

except as otherwise provided herein in paragraph XX), waived findings of fact and conclusions

of law, and waived any right to appeal from this Final Judgment:

I.

IT IS HEREBY ORDERED, ADJUDGED, AND DECREED that Defendants are

permanently restrained and enjoined from violating, directly or indirectly, Section 10(b) of the

Securities Exchange Act of 1934 (the "Exchange Act") [15 U.S.C. § 78j(b)] and Rule IOb-5

promulgated thereunder [17 C.F.R. § 240.IOb-5], by using any means or instrumentality of

Case 1:19-cv-04625-WFK-RER Document 61 Filed 11/01/19 Page 3 of 19 PageID #: 2697

interstate commerce, or of the mails, or of any facility of any national securities exchange, in

connection with the purchase or sale of any security:

(a) to employ any device, scheme, or artifice to defraud;

(b) to make any untrue statement of a material fact or to omit to state a material fact

necessary in order to make the statements made, in the light of the circumstances

under which they were made, not misleading; or

(c) to engage in any act, practice, or course of business which operates or would

operate as a fraud or deceit upon any person.

IT IS FURTHER ORDERED, ADJUDGED, AND DECREED that, as provided in

Federal Rule of Civil Procedure 65(d)(2), the foregoing paragraph also binds the following who

receive actual notice of this Final Judgment by personal service or otherwise: (a) Defendants'

officers, agents, servants, employees, and attorneys; and (b) other persons in active concert or

participation with Defendants or with anyone described in (a).

II.

IT IS HEREBY FURTHER ORDERED, ADJUDGED, AND DECREED that

Defendants are permanently restrained and enjoined from violating Section l 7(a) of the

Securities Act of 1933 (the "Securities Act") [15 U.S.C. § 77q(a)] in the offer or sale of any

security by the use of any means or instruments of transportation or communication in interstate

commerce or by use of the mails, directly or indirectly:

(a) to employ any device, scheme, or artifice to defraud;

(b) to obtain money or property by means of any untrue statement of a material fact

or any omission of a material fact necessary in order to make the statements

Case 1:19-cv-04625-WFK-RER Document 61 Filed 11/01/19 Page 4 of 19 PageID #: 2698

made, in light of the circumstances under which they were made, not misleading;

or

(c) to engage in any transaction, practice, or course of business which operates or

would operate as a fraud or deceit upon the purchaser.

IT IS FURTHER ORDERED, ADJUDGED, AND DECREED that, as provided in

Federal Rule of Civil Procedure 65(d)(2), the foregoing paragraph also binds the following who

receive actual notice of this Final Judgment by personal service or otherwise: (a) Defendants'

officers, agents, servants, employees, and attorneys; and (b) other persons in active concert or

participation with Defendants or with anyone described in (a).

III.

IT IS HEREBY FURTHER ORDERED, ADJUDGED, AND DECREED that Defendant

Middleton is permanently restrained and enjoined from violating Section 9(a)(2) of the Exchange

Act [15 U.S.C. § 78i(a)(2)], by the use of the mails or any means or instrumentalities of interstate

commerce, or of any facility of any national securities exchange, directly or indirectly, to effect,

alone with one or more other persons, a series of transactions in any security registered on a

national securities exchange, any security not so registered, or in connection with any security-

based swap or security-based swap agreement with respect to such security creating actual or

apparent active trading in such security, or raising or depressing the price of such security, for :

the purpose of inducing the purchase or sale of such security by others.

IT IS FURTHER ORDERED, ADJUDGED, AND DECREED that, as provided in

Federal Rule of Civil Procedure 65(d)(2), the foregoing paragraph also binds the following who

receive actual notice of this Final Judgment by personal service or otherwise: (a) Middleton's
Case 1:19-cv-04625-WFK-RER Document 61 Filed 11/01/19 Page 5 of 19 PageID #: 2699

officers, agents, servants, employees, and attorneys; and (b) other persons in active concert or

participation with Middleton or with anyone described in (a).

IV.

IT IS HEREBY FURTHER ORDERED, ADJUDGED, AND DECREED that

Defendants are permanently restrained and enjoined from violating Section 5 of the Securities

Act [15 U.S.C. § 77e] by, directly or indirectly, in the absence of any applicable exemption:

(a) Unless a registration statement is in effect as to a security, making use of any

means or instruments of transportation or communication in interstate commerce

or of the mails to sell such security through the use or medium of any prospectus

or otherwise;

(b) Unless a registration statement is in effect as to a security, carrying or causing to

be carried through the mails or in interstate commerce, by any means or

instruments of transportation, any such security for the purpose of sale or for

delivery after sale; or

(c) Making use of any means or instruments of transportation or communication in

interstate commerce or of the mails to offer to sell or offer to buy through the use

or medium of any prospectus or otherwise any security, unless a registration

statement has been filed with the Commission as to such security, or while the

registration statement is the subject of a refusal order or stop order or (prior to the

effective date of the registration statement) any public proceeding or examination

under Section 8 of the Securities Act [15 U.S.C. § 77h].

IT IS FURTHER ORDERED, ADJUDGED, AND DECREED that, as provided in

Federal Rule of Civil Procedure 65(d)(2), the foregoing paragraph also binds the following who
Case 1:19-cv-04625-WFK-RER Document 61 Filed 11/01/19 Page 6 of 19 PageID #: 2700

receive actual notice of this Final Judgment by personal service or otherwise: (a) Defendants

officers, agents, servants, employees, and attorneys; and (b) other persons in active concert or

participation with Defendants or with anyone described in (a).

V.
IT IS HEREBY FURTHER ORDERED, ADJUDGED, AND DECREED that, pursuant

to Section 2l(d)(2) of the Exchange Act [15 U.S.C. § 78u(d)(2)] and Section 20(e) of the

Securities Act [15 U.S.C. § 77t(e)], Defendant Middleton is prohibited from acting as an officer

or director of any issuer that has a class of securities registered pursuant to Section 12 of the

Exchange Act [15 U.S.C. § 78!] or that is required to file reports pursuant to Section lS(d) of the

Exchange Act [15 U.S.C. § 78o(d)].

VI.

IT IS HEREBY FURTHER ORDERED, ADJUDGED, AND DECREED that, pursuant

to Section 2l(d)(5) of the Exchange Act [15 U.S.C. § 78u(d)(5)], Defendants are prohibited from

engaging in any offering of digital securities.

VII.

IT IS HEREBY FURTHER ORDERED, ADJUDGED, AND DECREED that

Defendants are jointly and severally liable for disgorgement of $7,891,600, representing certain

profits gained as a result of the conduct alleged in the Complaint, together with prejudgment

interest thereon in the amount of$582,535, for a total of $8,474,137. Defendant Middleton is

liable for a civil penalty in the amount of $1,000,000, assessed pursuant to Section 20(d) of the

Securities Act [15 U.S.C. § 77t(d)] and Section 2l(d)(3) of the Exchange Act [15 U.S.C.

§ 78u(d)(3)].
Case 1:19-cv-04625-WFK-RER Document 61 Filed 11/01/19 Page 7 of 19 PageID #: 2701

Pursuant to Section 308(a) of the Sarbanes-Oxley Act of 2002, a Fair Fund is created so

that collected disgorgement, prejudgment interest, and civil penalties can be combined for

distribution in this matter (the "Veritaseum Fair Fund").

Defendants' obligation to pay disgorgement and prejudgment interest of$8,474,137, and

Defendant Middleton's obligation to pay a civil penalty of $1,000,000, shall be deemed fully

satisfied by the transmission of the "Frozen Metals" to the Independent Intermediary in the

manner set forth in paragraph VIII herein, by the transmission of the "Frozen Bank Assets" to

the Commission in the manner set forth in paragraph XVI herein, and by the turnover of the

"Frozen Digital Assets" in the manner set forth in paragraph XVII herein.

Amounts ordered to be paid as civil penalties pursuant to this Final Judgment shall be

treated as penalties paid to the government for all purposes, including all tax purposes. To

preserve the deterrent effect of the civil penalty, Middleton shall not, after offset or reduction of

any award of compensatory damages in any Related Investor Action based on Middleton's

payment of disgorgement in this action, argue that he is entitled to, nor shall he further benefit

by, offset or reduction of such compensatory damages award by the amount of any part of

Middleton's payment of a civil penalty in this action ("Penalty Offset"). If the court in any

Related Investor Action grants such a Penalty Offset, Middleton shall, within 30 days after entry

of a final order granting the Penalty Offset, notify the Commission's counsel in this action and

pay the amount of the Penalty Offset to the United States Treasury or to a Fair Fund, as the

Commission directs. Such a payment shall not be deemed an additional civil penalty and shall

not be deemed to change the amount of the civil penalty imposed in this Final Judgment. For

purposes of this paragraph, a "Related Investor Action" means a priyate damages action brought
Case 1:19-cv-04625-WFK-RER Document 61 Filed 11/01/19 Page 8 of 19 PageID #: 2702

against any of the Defendants by or on behalf of one or more investors based on substantially the

same facts as alleged in the Complaint in this action.

VIII.

IT IS HEREBY FURTHER ORDERED, ADJUDGED, AND DECREED, that, within 3

days after being served with a copy of this Final Judgment, Diamond State Depository, LLC,

d/b/a International Depository Services of Delaware ("IDS"), as custodian of the precious

metals held in the name of Defendant Veritaseum, LLC and/or Veritaseum Assets, LLC, ordered

frozen pursuant to Orders of this Court dated August I 2, 2019 and August 26, 20 I 9, representing

certain profits gained as a result of the conduct alleged in the Complaint, and listed in Appendix

A, hereto (the "Frozen Metals"), shall transmit the Frozen Metals to a vault in the name of the

Independent Intermediary;

IT IS FURTHER ORDERED, ADJUDGED, AND DECREED that the Independent

Intermediary, appointed by Orders of this Court dated August I 2, 20 I 9 and August 26, 20 I 9,

shall have the authority to take all reasonable actions to sell, and oversee the sale of the Frozen

Metals, including having the authority to retain a third-party consultant that will help it

determine the best manner of liquidating such assets, and to ensure that all proceeds from the

sale of the Frozen Metals are transmitted to the Commission per the terms set forth in Paragraph

XVI hereto.

The costs and expenses incurred by the Independent Intermediary in connection with

carrying out the obligations of this Paragraph VIII shall be reimbursed pursuant to Paragraph IX

below. The Commission shall hold the proceeds from the sale of the Frozen Metals, together

with any interest and income earned thereon, for distribution with the Veritaseum Fair Fund,

pending further order of the Court.

Case 1:19-cv-04625-WFK-RER Document 61 Filed 11/01/19 Page 9 of 19 PageID #: 2703

IT IS FURTHER ORDERED, ADJUDGED, AND DECREED that any outstanding

unissued digital tokens attributable to the ~rozen Metals created and held by Defendants or

entities under their control shall be cancelled.

Upon the transfer outlined above by IDS, all asset freeze obligations imposed upon IDS

by the Court's orders of August 12, 2019 (DE 9), and August 26, 2019 (DE 51) shall terminate

immediately.

IX.

IT IS HEREBY FURTHER ORDERED, ADJUDGED, ANJ? DECREED that upon

completion of its obligations in paragraphs VIII and XVII, herein, and its obligations under the

Orders of the Court entered August 12, 2019 and August 26, 2019, the Independent Intermediary

shall submit a final invoice for the reasonable costs, fees, and expenses incurred in connection

with its duties for payment by Defendants in accordance with this Court's order dated August 26,

2019; and its engagement as Independent Intermediary shall be terminated.

X.

IT IS HEREBY FURTHER ORDERED, ADJUDGED, AND DECREED that Holland &

Knight LLP ("Holland & Knight") is appointed Distribution Agent for the Veritaseum Fair Fund,

to assist in overseeing the administration and the distribution of the Veritaseum Fair Fund in

coordination with the Commission's counsel of record, pursuant to the terms of a distribution

plan to be approved by this Court. As Distribution Agent, Holland & Knight will, among other

things:

a) Perform services in accordance with the pricing schedule and cost proposal

submitted by Holland & Knight to the Commission;

Case 1:19-cv-04625-WFK-RER Document 61 Filed 11/01/19 Page 10 of 19 PageID #: 2704

b) As needed, arrange to hold securely in escrow assets to be distributed, including

without limitation, the digital assets discussed in paragraph XVII, below, and maintain, at all

times, a written description of the digital assets by, at least, name and amount;

c) Work with the Commission's counsel of record to develop a distribution plan to

be approved by the Court;

d) Determine the identities and locations of harmed investors pursuant to a claims

process or as otherwise directed by a Court-approved distribution plan (the "Plan");

e) Quantify losses and distribution amounts of investors eligible for a distribution

under the Plan and effect a distribution pursuant to the Plan;

t) Respond to investor and distribution related inquiries;

g) Calculate a reserve for fees, expenses, and taxes (the "Reserve") and perform all

activities necessary to the distribution of the Veritaseum Fair Fund net the Reserve in accordance

with the Plan;

h) Coordinate with the Court-appointed tax administrator to ensure timely

compliance with all tax related obligations;

i) File with the Court or provide to the Commission's counsel of record to file with

the Court, a quarterly status report within forty-five (45) days of Court approval of the Plan, and

provide additional reports within thirty (30) days after the end of every quarter thereafter. Upon

establishing an escrow account into which the monies in the Veritaseum Fair Fund are

transferred, Holland & Knight will include a quarterly accounting report, in a format to be

provided by the Commission, in the status report. The status report and quarterly accounting

report will inform the Court and the Commission of the activities and status of the Veritaseum

Fair Fund during the relevant reporting period and will specify, at a minimum:
Case 1:19-cv-04625-WFK-RER Document 61 Filed 11/01/19 Page 11 of 19 PageID #: 2705

i) The location of the account(s) comprising the Veritaseum Fair Fund;

ii) A written description by at least name and amount of any digital assets held;

and

iii) An interim accounting of all monies in the Veritaseum Fair Fund as of the

most recent month-end, including the value of the account(s), all monies

earned or received into the account(s), funds distributed to eligible claimants

under the Plan, and any monies expended from the Veritaseum Fair Fund to

satisfy fees, expenses, and taxes, incurred or required in the administration of

the Veritaseum Fair Fund or the implementation of the Plan; and

j) Comply with the Plan and all Court orders.

XI.

IT IS HEREBY FURTHER ORDERED, ADJUDGED, AND DECREED that Miller

Kaplan Arase LLP ("Miller Kaplan"), a certified public accounting firm, is hereby appointed as

Tax Administrator to execute all income tax reporting requirements, including the preparation and

filing of tax returns, for the Veritaseum Fair Fund. As the Tax Administrator, Miller Kaplan shall:

a) Be designated the Tax Administrator of the Veritaseum Fair Fund, pursuant to

Section 468B(g) of the Internal Revenue Code, 26 U.S.C. § 468B(g), and related regulations, and

shall satisfy the administrative requirements imposed by those regulations, including but not

limited to (i) obtaining a taxpayer identification number, (ii) filing applicable federal, state, and

local tax returns and paying taxes reported thereon out of the Veritaseum Fair Fund, and (iii)

satisfying any information, reporting, or withholding requirements imposed on distributions from

the Veritaseum Fair Fund, including but not limited to the Foreign Account Tax Compliance Act.
Case 1:19-cv-04625-WFK-RER Document 61 Filed 11/01/19 Page 12 of 19 PageID #: 2706

Upon request, the Tax Administrator shall provide copies of any filings to the Commission's

counsel of record;

b) Be entitled to charge reasonable fees for tax compliance services and related

expenses in accordance with its agreement with the Commission for the Tax Years 2019-2021;

c) At such times as the Tax Administrator deems necessary to fulfill the tax

obligations of the Veritaseum Fair Fund, submit a request to the Commission's counsel ofrecord

for authorization to pay from the Veritaseum Fair Fund tax obligations of the Veritaseum Fair

Fund;and

d) Comply with the Plan and all Court orders.

XII.

IT IS HEREBY FURTHER ORDERED, ADJUDGED, AND DECREED that Holland &

Knight and Miller Kaplan, as Distribution Agent and Tax Administrator, respectively, are entitled to

rely on all outstanding rules of law and Court Orders.

XIII.

IT IS HEREBY FURTHER ORDERED, ADJUDGED, AND DECREED that Holland &

Knight (as Distribution Agent) and Miller Kaplan will be entitled to reimbursement and

compensation from the Veritaseum Fair Fund for the reasonable fees and expenses incurred in the

performance of their duties-Holland & Knight, in accordance with its cost proposal submitted to

the Commission's counsel of record, and Miller Kaplan in accordance with its agreement with the

Commission for Tax Years 2019-2021. The Commission is authorized to approve and arrange

payment of all tax obligations owed by the Veritaseum Fair Fund and the fees and expenses of

Holland & Knight and Miller Kaplan directly from the Veritaseum Fair Fund without further order

of this Court. Holland & Knight and Miller Kaplan will submit invoices of all fees and expenses
Case 1:19-cv-04625-WFK-RER Document 61 Filed 11/01/19 Page 13 of 19 PageID #: 2707

incurred in connection with their respective duties to the Commission's counsel of record for

review and, as appropriate, payment. All payments will be reflected in the quarterly and final

accountings referenced above.

XIV.

IT IS HEREBY FURTHER ORDERED, ADJUDGED, AND DECREED that upon

completing their duties as set forth herein, Holland & Knight and Miller Kaplan will jointly

provide to the Commission's counsel of record a final accounting in a form provided by the

Commission's counsel of record; a final report providing statistics related to the distribution,

including amounts disbursed to investors, amounts returned and/or not delivered or negotiated,

outreach efforts on unnegotiated payments and the costs and results of the same, and statistics

concerning payments made to individuals and entities; and an affidavit in a format acceptable to

the Commission's counsel of record summarizing their activities as distribution agent and tax

administrator.

xv.
IT IS HEREBY FURTHER ORDERED, ADJUDGED, AND DECREED that Holland &

Knight and/or Miller Kaplan may be removed sua sponte at any time by the Court or upon

motion of the Commission and replaced with a successor. In the event Holland & Knight and/or

Miller Kaplan decide to resign, the resigning entity must first give written notice to the

Commission's counsel of record and the Court of its intention, and resignation, if permitted, will

not be effective until the Court has appointed a successor. The resigning entity will then follow

instructions from the Court or a successor for relinquishing its duties, including all records

related to Veritaseum Fair Fund monies and property. Unless otherwise ordered, the resigning

entity will within thirty (30) days of the notice of resignation or removal, file with the Court an
Case 1:19-cv-04625-WFK-RER Document 61 Filed 11/01/19 Page 14 of 19 PageID #: 2708

accounting and a report of its activities as further set forth above, and provide any other

information requested by the Commission, the Court, or the successor.

XVI.

IT IS HEREBY FURTHER ORDERED, ADJUDGED, AND DECREED that within 3

days after being served with a copy of this Final Judgment, Citibank, N.A., Bank of America,

N.A., J.P. Morgan Chase Bank, N.A., Interactive Brokers, LLC, Kraken (Payward, Inc.)

("Kraken"), and Gemini Trust Company, LLC ("Gemini") (the "Financial Entities") or their

subsidiaries, shall transfer the entire balance held in the following accounts, which were frozen

pursuant to an Order of this Court dated August 12, 2019, and/or pursuant to a further Order of

this Court dated August 26, 2019 (the "Frozen Bank Assets"), to the Commission:

Entity Acct. Number or

Identifying Information:
Bank of America XXXXXX3904
Bank of America XXXXXX3917
Bank of America XXXXXXll42
Bank of America XXXXXX7681
Bank of America XXXXXX7694
Bank of America XXXXXX7856
Bank of America XXXXXX7869
Citibank XXXl498
Citibank XXX171 I
Citibank XXX1404
Citibank XXX1630
Citibank XXXl201
Citibank XXXXX4865
Citibank XXXXX2142
JPMC XXXXX7843
JPMC XXXXX5610
Case 1:19-cv-04625-WFK-RER Document 61 Filed 11/01/19 Page 15 of 19 PageID #: 2709

JPMC XXXXX3027
JPMC XXXXX8958
Kraken XXXXX5A7Q
Gemini Account ID ending in
5247
Interactive Brokers XXXXX0423

In the case of digital assets in the above accounts held at Kraken and Gemini, Kraken and

Gemini shall transfer the digital assets to Holland and Knight at an address provided by Holland

and Knight within three days of being provided with such address. Holland and Knight shall

provide Kraken and Gemini the address for delivery within three days of being served with this

Final Judgment.

The Financial Entities may transmit payment electronically to the Commission, which

will provide detailed ACH transfer/Fedwire instructions upon request. Payment may also be

made directly from a bank account via Pay.gov through the Commission's website at

http://www.sec.gov/about/offices/ofm.htm. The Financial Entities also may transfer these funds

by certified check, bank cashier's check, or United States postal money order payable to the

Securities and Exchange Commission, which shall be delivered or mailed to:

Enterprise Services Center

Accounts Receivable Branch
6500 South MacArthur Boulevard
Oklahoma City, OK 73169

and shall be accompanied by a letter identifying the case title, civil action number, and

name of this Court; and specifying that payment is made pursuant to this Final Judgment. The

Commission shall hold the transferred Frozen Bank Assets, together with any interest and

income earned thereon, for distribution with the Veritaseum Fair Fund,, pending further order of

the Court.
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Upon the payments and transfers outlined above by the Financial Entities, all asset freeze

obligations imposed upon the Financial Entities by the Court's orders of August 12, 2019 (DE

9), and August 26, 2019 (DE 51) shall terminate immediately.

XVII.

IT IS HEREBY FURTHER ORDERED, ADJUDGED, AND DECREED that the digital

assets Defendants transmitted to the Independent Intermediary on August 21, 2019, pursuant to

an Order of this Court dated August 12, 2019, and identified in Schedule A of the letter of

Holland & Knight to the Court dated August 26, 2019 and filed August 29, 2019 (the "Frozen

Digital Assets"), shall be addressed in the following manner:

a) All Frozen Digital Assets identified in Schedule A as "Ether" or "Bitcoin" are

hereby turned over to Holland & Knight as Distribution Agent, for holding

securely in escrow in accordance with paragraph X(b) above, pending further

order of the Court.

b) All Frozen Digital Assets identified in Schedule A as "Veritaseum" shall be held

permanently at their current blockchain address with no further transfers or

distributions.

c) All Frozen Digital Assets identified in Schedule A as "Ve Gold GI," "VeGold

Kl," "VGLZI," "VGLKl," "VSLKl," "VPMZl," "VGLGI," or "VSLZl," shall

be returned to Defendants for cancellation or destruction within three days of

receipt.

d) All other digital assets held by the Independent Intermediary shall be returned to

the originating addresses.

Case 1:19-cv-04625-WFK-RER Document 61 Filed 11/01/19 Page 17 of 19 PageID #: 2711

XVIII.

IT IS HEREBY FURTHER ORDERED, ADJUDGED, AND DECREED that if at any

time following the entry of the Final Judgment the Commission obtains information indicating

that Defendants knowingly provided materially false or misleading information or materials to

the Commission or in a related proceeding, the Commission may, at its sole discretion and

without prior notice to the Defendants, petition the Court for an order requiring Defendants to

pay an additional civil penalty. In connection with any such petition and at any hearing ~eld on

such a motion: (a) Defendants will be precluded from arguing that they did not violate the

federal securities laws as alleged in the Complaint; (b) Defendants may not challenge the validity

of the Judgment or any related Undertakings; (c) the allegations of the Complaint, solely for the

purposes of such motion, shall be accepted as and deemed true by the Court; and (d) the Court

may determine the issues raised in the motion on the basis of affidavits, declarations, excerpts of

sworn deposition or investigative testimony, and documentary evidence without regard to the

standards for summary judgment contained in Rule 56(c) of the Federal Rules of Civil

Procedure. Under these circumstances, the Commission may take discovery, including discovery

from appropriate non-parties.

XIX.

IT IS HEREBY FURTHER ORDERED, ADJUDGED, AND DECREED that each

Consent to this Final Judgment of Defendants is incorporated herein with the same force and

effect as if fully set forth herein, and that Defendants shall comply with all of the undertakings

and agreements set forth therein.

Case 1:19-cv-04625-WFK-RER Document 61 Filed 11/01/19 Page 18 of 19 PageID #: 2712

xx.
IT IS HEREBY FURTHER ORDERED, ADJUDGED, AND DECREED that, solely for

purposes of exceptions to discharge set forth in Section 523 of the Bankruptcy Code, 11 U.S.C.

§ 523, the allegations in the complaint are true and admitted by Defendant Middleton, and

further, any debt for disgorgement, prejudgment interest, civil penalty or other amounts due by

Defendant Middleton under this Final Judgment or any other judgment, order, consent order,

decree, or settlement agreement entered in connection with this proceeding, is a debt for the

violation by Defendant Middleton of the federal securities laws or any regulation or order issued

under such laws, as set forth in Section 523(a)(l 9) of the Bankruptcy Code, 11 U.S.C.

§ 523(a)(l 9).

XXI.

IT IS HEREBY FURTHER ORDERED, ADJUDGED, AND DECREED that this Court

shall retain jurisdiction of this matter for the purposes of enforcing the terms of this Final

Judgment.

Dated: ~v/;t~- o( , 2019

s/WFK
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APPENDIX A TO FINAL JUDGMENT

The "Frozen Metals" Pursuant to Paragraph VIII

Product Code Product Description Quantity

GBlPEWC 1 OZ GOLD BAR AUSTRALIAN PERTHMINT WITH 13
CERT
GBlVACWC 1 OZ GOLD BULLION VACAMBI SUISSE WITH CERT 239
GBK49RC 32.15 OZ GOLD BULLION ROYAL CANADIAN MINT 5
KILO BAR
GBlGVA 0.032151 OZ GOLD ONE GRAM V ALCAMBI SUISSE 22
BAR .9999
GB50SBSVC 50 GRAM GOLD VALCAMBI BAR SUISSE W/CERT 13
9999 COMBIBAR
SRlBU 1 OZ SILVER BULLION BUFF ALO* TYPE ROUND 1089
SBKGAS 32.15 OZ SILVER KILO BAR ASAHI 259
SBKGOPM 32.15 OZ SILVER OHIO PRECIOUS METALS KILO BAR 6
PDMLI 1 OZ PALLADIUM CANADIAN MAPLE LEAF 43