SEC Subpoenas Riot Blockchain Over Cryptocurrency Plans
Various worrisome trends involving blockchain technology exist as of right now. One of the more popular solutions for struggling firms is to announce blockchain or cryptocurrency plans. As a result of such turnaround efforts, company stocks will usually soar in value. For Colorado-based Riot Blockchain, the decision to pursue this option backfired rather spectacularly.
Riot Blockchain Gets Subpoenaed
Riot Blockchain is not the only company to be looking at ways to push the value of its stock to new heights. While there are many ways to achieve that goal, the company apparently decided to announce a cryptocurrency-related turnaround plan several months ago. With the company recently issuing its first annual report since its business model pivot, the SEC has subpoenaed the company due to “irregularities”.
While Riot Blockchain claims to be fully cooperating with this request, it remains to be seen how this will play out. What is clear is that the firm decided to move into the world of blockchain and cryptocurrency. While both of these industries are quite appealing to companies all over the world, not every firm has legitimate intentions. We have seen several companies claim to have ventured into blockchain simply to push up their stock values.
It is only normal that the SEC will look into what Riot Blockchain has to offer. The company is a spin-off of a former biotech company known as Bioptix. The connection between biotech and cryptocurrency is not necessarily present, and the decision to enter this new market has always been somewhat controversial. After announcing the new name, the company saw its shares hit a 52-week high in December of 2017. Since that time, the value has dropped rather spectacularly, which coincides with the negative Bitcoin price trend.
One thing Riot Blockchain has done right is acquire multiple cryptocurrency-related products, services, and companies. The firm now has its own Bitcoin mining equipment and BTC portfolio, and they also acquired companies and talent working on various blockchain technologies. Even so, the SEC is concerned about what the company is doing and plans to do in the future.
It seems likely that Riot Blockchain will be removed from the Nasdaq exchange unless they conduct an annual shareholder meeting. While the company has set a tentative date in May for that meeting, it remains to be seen whether it will happen this time around. After postponing several meetings in recent months, the upcoming date will have to hold true. It’s a very peculiar situation well worth keeping an eye on.
How all of this will play out for Riot Blockchain remains to be determined. The company may have perfectly honest intentions, even though their behavior over the past few months raises a lot of questions. Solving these issues is not all that difficult, but scrutiny from the SEC is not necessarily something the company expected at this point. Cracking down on companies trying to inflate stock prices by using the blockchain buzzword will remain a top priority for the agency.
Source: Read Full Article