The United States Securities and Exchanges Commission just issued a subpoena to a company that suspiciously added “Blockchain” to their name during crypto’s sudden rise last year.
Riot Blockchain suspiciously changed their company’s name last year, along with many others, adding the word “Blockchain” to it in order to ride the bandwagon. Unfortunately for them, the SEC issued and sent a subpoena to them, providing details in an SEC Form 10-K annual report that was filed on April 17th.
The subpoena from the SEC was officially received by Riot Blockchain on April 9th. The commission requested them to provide “certain information” to which Riot Blockchain responded that they intend to fully cooperate with the SEC request. The company has made a statement that they aren’t concerned with receiving a subpoena as “many companies engaged in blockchain and cryptocurrency businesses have received subpoenas from the SEC,” referencing the fact that the SEC has been conducting a very highly publicized probe on crypto companies.
Prior to their name change, Riot Blockchain was known as Bioptic, a company that catered to patents that need “regulatory approval for an offer to sell, market, distribute, import and export luteinizing hormone (“LH”) and/or follicle-stimulating hormone (“FSH”) products for cattle, equine and swine for the assistance and facilitation of reproduction,” which was detailed in a press release last fall regarding the change.
After an unsuccessful bout as a veterinary and life science business, Riot Blockchain shifted to cryptocurrency mining business, using Bitmain hardware and investments in cryptocurrency to propagate funds. They have also reported that they are planning on opening a separate cryptocurrency exchange business.
On their SEC filing, they listed retail giant Overstock.com as their main competitor under the “competition” section.
However, despite the sudden change in their line of business, they reported that they are “not profitable and have incurred losses since our inception” and “expect to continue to incur losses for the foreseeable future.”
The company’s name change inspired a 1,611% trading range change in their stocks. Their SEC filing noted that Riot Blockchain’s stock price was at an all-time high of $38 per share back in December 2017. However, their stock’s closing price as of April 12th of this year was only at $7.47
The sudden decrease in price is the direct result of the negative press that Riot Blockchain has received. They made it clear in the SEC filing that a report from the CNBC in February stated that there were possible stock manipulation and insider trading involved with their company.
SEC’s filing mentioned that their chairman, Jay Clayton has “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.” Back in January, the SEC made it clear that they will enforce stricter regulations on companies that changed their names suddenly to ride the crypto bandwagon.
Earlier this month, the SEC has already filed a complaint against Longfin, a crypto-affiliated company, for insider trading. The commission also issued a subpoena for Techcrunch’s founder’s crypto hedge fund in March. Overstock.com’s crypto subsidiary has also revealed that the SEC was investigating their Initial Coin Offering as well.