December 19, 2017 (The Ferowich Report) — The top US securities regulator temporarily ceased trading of securities offered by a blockchain investment firm after its shares jumped more than 17,000 percent in less than three months.
The Crypto Company’s shares could no longer be traded as of late Monday. The Malibu, California-based company “provides institutions and individuals direct exposure to the growth of global blockchain developments,” according to its website.
According to a Securities and Exchange Commission announcement, the ban on trading was spurred by “concerns regarding the accuracy and adequacy” of public information regarding compensation paid for promotion and statements filed with the SEC.
The potentially misleading statements in the filings related to “plans of the company’s insiders to sell their shares of The Crypto Company’s common stock,” the agency said.
“Question have also arisen concerning potentially manipulative transactions in the company’s stock in November 2017,” the SEC said. The small-cap company’s shares are traded over the counter under ticker symbol CRCW.
New York-based law firm Bernstein Liebhard LLP announced Tuesday evening that it is “investigating whether The Crypto Company and its directors breached their fiduciary duties and/or violated the federal securities law by making false or misleading statements or omissions regarding the Company’s business.”
The stock was trading near $575 before the SEC suspension, which remains in effect until midnight on January 3.
On December 12, the firm sold 1,150,280 shares at a price of $7.00 to 76 accredited investors “in connection with the closing of a private placement,” according to public filings. Theoretically, selling a share at $575 after purchasing it for $7 would yield a $568 profit per share. An 8-K disclosure filed by the company states that the shares “have been acquired for investment and not with a view to, or in connection with, the sale or distribution thereof.”
The company’s chief executive, Mike Poutre, told Business Insider Tuesday, “we are fully reporting and get halted. SEC is sending the wrong message. We are working with counsel and will handle things appropriately.”
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