The US Securities and Exchange Commission has placed a temporary halt on trading in The Crypto Company (CRCQ) stock until January 3, 2018. The company’s stock has just seen a 2,700 percent rise in price. It recently agreed to purchase a German cryptocurrency data platform called Coin Tracking E. K.
Citing concerns regarding “accuracy and adequacy,” the SEC expressed concerns about the quality of information that was given to investors. The regulator also is looking into whether “potentially manipulative transactions” involving the stock took place last month.
The Crypto Co. provides digital assets, consulting services, and technologies to the “blockchain and cryptocurrency markets.” It doesn’t sell cryptocurrencies or other digital-type monies. The Crypto Co.’s stock price, at $3.50 a share in late September, rose to $575 earlier this week. As a result, The Crypto Co.’s stock value is now over $11B—that’s more than the market worth of some of the most renowned companies in the US, including Macy’s.
According to CNN, The SEC suspended trading not long after The Crypto Co. announced that it intends to “ split its stock 10-1” to lower its share price to allow average investor to get involved, too. Such a split would have dropped The Crypto Co.’s stock price to $57.50, while leaving the company’s current value intact.
Investors have been infusing millions of dollars into companies that have the words “blockchain” or “crypto” in their names. The most known cryptocurrency to date, Bitcoin, has seen its value go up by over 1,800% in 2017 in the wake of exchange companies incorporating virtual currency with futures trading. Two other small companies to see recent stock price bumps from their involvement in the blockchain technology include Longfin, which acquired blockchain-based microlending company Ziddu, and former biotech firm Riot Blockchain, which is now in the crypto business.
Longfin saw its share price go up by over 2,500% over two days. Once under $5 a share its share price reached $142.82. Riot Blockchain saw a 1200% stock price surge this year.
There has been concern over what CNBC called “bitcoin mania” and what appears to be numerous small stocks seeking to avail of the craze. The SEC has been coming down on potential digital currency schemes, including those involving initial coin offerings (ICOs) that sell some sort of digital currency rather than stock. In a published Public Statement, SEC Chairman Jay Clayton addressed ICOs and cryptocurrencies noting that to date, no initial coin offerings are SEC registered nor has the regulator approved for listing any exchange-traded products (ETPs) with cryptocurrencies or cryptocurrency-related assets.
Cryptocurrencies are generally touted as items with inherent value designed for financial transactions, including sales and purchases. They are created to act in many of the same ways as traditional currencies but they are not government-backed or regulated. Cryptocurrencies are not securities. The SEC does not oversee their offerings or sales.
If you are an investor who was sold The Crypto Co. stock by an investment adviser or a broker, please contact Shepherd Smith Edwards and Kantas, LTD LLP today so that we can help you explore your legal options. One of our investment adviser attorneys or broker fraud lawyers would be happy to offer you a free, no obligation, case consultation.
Statement on Cryptocurrencies and Initial Coin Offerings, SEC.gov, December 11, 2017
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