Riot Blockchain Receives Subpoena From SEC Requesting “Certain Information”
Riot Blockchain, the Colorado-based blockchain technology company that saw its shares soar last year after its crypto makeover, received a subpoena from the U.S. Securities and Exchange Commission (SEC) on April 9 requesting “certain information.”
The news was disclosed in the company’s annual report yesterday. According to the filing, Riot Blockchain “intends to fully cooperate with the SEC request.”
“On April 9, 2018, the Company received a subpoena from the SEC requesting certain information from the Company. The Company intends to fully cooperate with the SEC request. The Company 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. The Company believes that many companies engaged in blockchain and cryptocurrency businesses have received subpoenas from the SEC which presents an addtional industry risk. The existence of an investigation of the Company specifically and the industry generally could have a materially adverse effect on the Company, its business or operations, and the industry as a whole.”
This was Riot Blockchain’s first annual report since changing its name from Bioptix last October. The company previously operated as a diagnostics and research tools company before switching its focus to the blockchain. According to the report, the company believes the decision to change its name and strategy “could subject [it] to increased SEC scrutiny,” which they describe as “an additional industry risk.”
“In late 2017, we determined to instead pursue a blockchain and digital currency (specifically bitcoin)‑related business, initially through investments in existing companies. The SEC has announced that it is scrutinizing public companies that change their name or business model in a bid to capitalize upon the hype surrounding blockchain technology, and has suspended trading of certain of such companies. 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.”
The report also details the company’s ongoing battle to avoid being delisted by the NASDAQ, which will require Riot Blockchain to hold its 2017 annual shareholder meeting no later than May 15, 2018.
The SEC has issued a subpoena to Riot Blockchain, who changed their name to a blockchain-related one and the stock exploded in value.
Remember the two rules of crypto:
1. Don't be stupid
2. Don't be greedy
— Pomp 🌪 (@APompliano) April 18, 2018
Riot Blockchain (RIOT) has seen its stock price fall dramatically since peaking at $46.20 in December. Any momentum gained by jumping on the crypto bandwagon has since subsided as the stock is down 85% from all-time highs to $6.95 a share, leaving the tech company with a market cap under $100 million.