The CEO Of Riot Blockchain resigned over allegations of pump and dump scheme. The crime was exposed by the United State Securities and Exchange Commission.
The Whole Story
The United States Securities Exchange Commission (SEC) charged ten persons to court over a connection with a pump and dump scheme. The alleged fraudulent act saw the perpetrators selling unlawful stocks which caused a harmful impact on investors who were left holding worthless stock. The prime suspect in the case as noted by the commission is Barry Honig, Riots’ former largest shareholder and also the CEO of Riot Blockchain, John O’Rourke. The fraudulent scheme generated an estimated $27 million for the suspects.
SEC’s investigation revealed that Honig purchased a large number of stocks at a steep discount which gave him substantial ownership of the firm. Afterward, he promoted and started manipulative trading with his group. This led to a pump of the value of the company’s stock which made it appear like active trading. Subsequently, they dump the value by cashing in on millions at the expense of many investors.
A senior associate director in the SEC’s Division of Enforcement, Sanjay Wadhwa, noted that Honig and his associates engaged in manipulating the market to advance their financial interest making innocent investors victims of their dubious act. He further stated that the act undermined the integrity of the securities market as the resolve of SEC to punish and pursue participants of microcap fraud scheme is not appreciated.
Notably, Riot announced the restructuring of the leadership of the firm a day after the SEC announced the allegation. John O’Rourke resigned, and a new CEO in the person of Chris Ensey was named. The firm refused to mention John’s association with any fraudulent scheme.
Meanwhile, this is not the first time Riot Blockchain is involved in related litigation with the SEC. Notably, in April the firm got a subpoena from SEC facing removal from Nasdaq for not following due policies. So also is an investigation into the firm’s purchase of a stake on a Canadian exchange.
Pump And Dump Trend
Fraudulent act of pump and dump of cryptocurrency asset has become a trend by dubious individuals in the cryptocurrency space. This has often been stated as the reason for some sudden rise and dumps in the value of some cryptocurrencies.
Less prominent cryptocurrencies have become the target of pump and dump perpetrators recently. A secret telegram channel has been unveiled to be behind the perpetration of pumps and dumps lately.