The United States Securities and Exchange Commission (SEC) has ramped up its investigation into crypto mining firm Blockchain Riot.
This is according to the firm’s most recent 10-Q quarterly report.
Riot Blockchain is a former biotech company that modified its name to have the word “blockchain” last year, seeing valuations surge from $8 a share to more than $40 as a result, a CNBC report indicated. It is said to be currently operating a crypto mining facility in Oklahoma City.
This week’s quarterly earnings report revealed that the firm got a letter from the SEC on July 30 that informed them that the commission had started an action "Pursuant to Section 8(e) [of] the Securities Act of 1933," with specific inquiry given to Riot Blockchain’s registration statements.
Under Section 8, if the SEC believes that the registration statement contained “any untrue statement” or removed any “material facts,” it may “issue a stop order suspending the effectiveness of the registration statement."
The issuance of a stop order would result in no company shares being traded until the agency considers that deficiencies have been sufficiently addressed.
Reed Brodsky, partner at law firm Gibson Dunn, was quoted by CNBC as saying that:
"This SEC subpoena and the order do not appear to be the type of regularly issued subpoena in the normal course of the SEC's oversight of registrants. The company has to take this very seriously. An adverse finding by the SEC could be devastating."
Jake Zamansky of securities law firm Zamanksy LLC also remarked that "the fact that the SEC division of enforcement is involved suggests they are considering securities fraud action against the firm."
Blockchain Riot had already received an a subpoena last April 9, which the company had just ignored at the time, claiming that “many companies engaged in blockchain and cryptocurrency businesses have received subpoenas from the SEC.”
The April subpoena related to matters that included “the proper asset classification, applicability of the Investment Company Act [of] 1940, to the Company's business and affairs and accounting treatment of its cryptocurrency."
Shares of Blockchain Riot had already dropped by more than 12% on Wednesday.
In March of this year, the SEC notoriously went on a widely publicized crypto investigation, after chairman Jay Clayton vowed to raise scrutiny into companies that sought to “capitalize on the perceived promise” of the blockchain revolution.
Posted from my blog with SteemPress : http://www.cryptalnews.com/sec-ramps-up-investigation-crypto-mining-firm-blockchain-riot/