Apr 18, 2018 at 06:00 UTC | Updated Apr 18, 2018 at 11:33 UTC Riot Blockchain, the Nasdaq-listed company that made headlines last year after its pivot to cryptocurrency related services, has received a subpoena from the U.S. Securities and Exchange Commission. The disclosure was made in Riot Blockchain's annual report, which was released on April 17. The company said in its filing that the SEC is "requesting certain information from the Company." "As part of its review of the Company's public filings, the Securities and Exchange Commission...has inquired about certain of the Company's assets' classification as, and amount of, possible Investment Company assets," explained elsewhere in its filing, adding: "The Company intends to fully cooperate with the SEC request." That the firm would face a probe from the U.S. securities regulator is perhaps unsurprising, given that the agency indicated in January that it was scrutinizing companies that have pivoted toward blockchain in recent months amid a wave of interest from investors.
"The SEC is looking closely at the disclosures of public companies that shift their business models to capitalize on the perceived promise of distributed ledger technology and whether the disclosures comply with the securities laws, particularly in the case of an offering," SEC chairman Jay Clayton remarked at the time. Riot Blockchain's stock price soared in December, exceeding $40 per share at one point - as of Tuesday, the stock was trading at $7.30, according to data from Google. The company has also been hit with several investor lawsuits in the wake of that stock price peak. The subpoena also comes just a week after Riot Blockchain announced its acquisition of a futures brokerage firm on March 31, announcing plans to launch a cryptocurrency and futures exchange in the U.S. Elsewhere in the report, Riot Blockchain offered new details about a potential delisting from the Nasdaq, a possibility it first disclosed back in January due to its failure to hold an annual meeting (a situation that was later the subject of a CNBC report). "In order to maintain our NASDAQ listing, we must satisfy the requirements of a plan of compliance that we submitted to, and was accepted by, NASDAQ. That plan contemplates, among other things, holding our 2017 annual meeting of shareholders no later than May 15, 2018," Riot Blockchain wrote. SEC image via CoinDesk
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SEC issues subpoena to cryptocurrency company Riot Blockchain The SEC has issued a subpoena to Riot Blockchain, the cryptocurrency company whose stock skyrocketed after changing its name, the company said. A CNBC investigation in February found a number of red flags in the company's SEC filings that might make investors leery. Riot Blockchain Chairman John O'Rourke accused CNBC of publishing "a negative one-sided piece." Scott Zamost | Michelle Caruso-Cabrera | Hannah Kliot | Jennifer Schlesinger Published 3 Hours Ago Updated 2 Hours Ago CNBC.com
SEC subpoenas Riot Blockchain 2 Hours Ago | 00:28 The Securities and Exchange Commission has issued a subpoena to Riot Blockchain, the cryptocurrency company whose stock skyrocketed after changing its name, the company said on Tuesday. Riot's annual 10K report disclosed that it had received the SEC subpoena on April 9 "requesting certain information from the Company." It "intends to fully cooperate with the SEC request," the report said. "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."
Tech Republic | Riot Blockchain John O'Rourke CEO of Riot Blockchain Riot Blockchain Chairman John O'Rourke did not immediately respond to a request for comment. The SEC declined to comment. In a news release, O'Rourke said, "We continue to focus on the expansion of our cryptocurrency mining operations and the active investigation of launching a cryptocurrency exchange in the United States. We see a strong integration opportunity of supply and demand between our mining operation and a potential exchange.' A CNBC investigation in February found a number of red flags in the company's SEC filings that might make investors leery: annual meetings that are postponed at the last minute, insider selling soon after the name change, dilutive issuances on favorable terms to large investors, SEC filings that are often Byzantine and, evidence that a major shareholder was getting out while everyone else was getting in. O'Rourke accused CNBC of publishing "a negative one-sided piece." In the 10k report, the company said it "believes that many companies engaged in blockchain and cryptocurrency businesses have received subpoenas from the SEC which presents an additional industry risk." "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." As bitcoin hit record highs in late December, a hot new stock was making news on a daily basis. Riot Blockchain's stock shot from $8 a share to more than $40, as investors wanted to cash in on the craze of all things crypto. But Riot had not been in the cryptobusiness for long. Until October, its name was Bioptix, and it was known for having a veterinary products patent and developing new ways to test for disease. The company said that it is not profitable and expects "to continue to incur losses for the foreseeable future, and these losses could increase as we continue to develop our business.' It will focus on bitcoin mining and establishing a cryptocurrency exchange and future brokerage operations, the report said. A bitcoin mining facility in Oklahoma City is in the early stage of development and the company's current strategy is "new and unproven" in an industry "that is in itself new an evolving.' Riot warned that it "may never become profitable." "Even if we achieve profitability in the future, we may not be able to sustain profitability in subsequent periods," the report said. WATCH: CNBC investigates Riot Blockchain
CNBC investigates Riot Blockchain 3:09 PM ET Fri, 16 Feb 2018 | 08:21
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