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SEC Subpoenaed Riot Blockchain

The Securities Exchange Commission – SEC – has sent a subpoena to Riot Blockchain, a cryptocurrency company whose stock plummeted 77% in 2018. The firm is basically a biotechnology business that began emerging in the blockchain industry in 2017. The April 9th subpoena demanded certain information which the firm hasn’t disclosed yet.

Riot Blockchain Report

According to the statement by Riot Blockchain in its annual 10k report, released on April 17, “The Company intends to fully cooperate with the SEC request. It has notified its insurance carrier although there can be no assurance that the costs of compliance with the subpoena or any related matters will be eligible for insurance coverage. Nevertheless, response to the subpoena will entail cost and management’s attention.”

SEC filing on blockchain companies is not surprising. Regulators had indicated in January that they will roundup companies that have turned to blockchain recently.

Name Change

Riot Blockchain was previously known as Biopix. While Riot Blockchain was involved in cryptocurrency, Biopix was focusing on veterinary and life science-oriented endeavors for diagnostics and research operations. The company changed its name explaining its new focus as “will be a strategic investor and operator in the blockchain ecosystem with a particular focus on the Bitcoin and Ethereum blockchains”. Changing the name quickly without an adequate track record is not viewed positively. This can have an adverse impact on the subsequent investigation by SEC.

SEC Chairman’s Comments

Riot Blockchain’s report points out that “SEC Chairman Jay Clayton warned that it is not acceptable for companies without a meaningful track record in the sector to dabble in blockchain technology, change their name and immediately offer investors securities without providing adequate disclosures about the risks involved, As a result, we could be subject to substantial SEC scrutiny that could require devotion of significant management and other resources and potentially have an adverse impact on the trading of our stock.”

Reportedly when Bitcoin prices climbed to almost $20,000 USD in Mid December 2017, Riot Blockchain’s stock shot from $8 to $40 per share. The SEC’s decision comes amid Riot’s announcement of launching a cryptocurrency and futures exchange in the US on March 31.

The firm also added investigation could make matters worse: “the existence of an investigation … could have a materially adverse effect on the company, its business or operations, and the industry as a whole.”

Riot Blockchain Delisting

The company disclosed it could go ahead and delist from Nasdaq for not holding an annual shareholder meeting and as such the company’s stock will no longer be available. In a statement, Riot wrote the company will hold the meeting of shareholders probably up to May 15, 2018. The company has disclosed that “We are not profitable and have incurred losses since our inception.  We expect to continue to incur losses for the foreseeable future, and these losses could increase as we continue to work to develop our business.”

Tabassum Naiz

Tabassum is an enthusiastic author, web geek, writer & digital marketer, with experience writing for tech, digital and cryptocurrency blogs. Follow her on Twitter

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