Riot Blockchain CEO Out, Stock Price Falls by Over 24 Percent
Chairman and CEO of Riot Blockchain John O’Rourke resigned after allegations of fraud from the Securities and Exchange Commission (SEC). O’Rourke had been the chief executive of the company since November 2017. Chris Ensey has replaced him as the interim CEO, and Remo Mancini is the new chairman of the board. The company announced the changes in a Saturday press release.
Unrelated Allegations Could Be the Reason
The company’s press release did not cite reasons for O’Rourke’s resignation. However, it is likely because of SEC fraud charges. In a Friday press release, the US financial regulator announced charges against 10 individuals and their associated entities for fraudulent schemes, which brought in over $27 million.
Two individuals related to Riot were named in the release. One was O’Rourke, and the other was Barry Honig, a Florida-based investor who was the largest shareholder of the company in the past. SEC called these individuals “microcap fraudsters.” However, Riot BlockChain wasn’t named by the agency in the complaint.
The SEC complaint further suggests:
“Honig was the primary strategist, calling upon other Defendants to buy or sell stock, arrange for the issuance of shares, negotiate transactions, or engage in the promotional activity.”
Honing’s modus operandi was detailed by the agency as follows:
“In each scheme, Honig orchestrated his and his associates’ acquisition of a large quantity of the issuer’s stock at steep discounts, either by acquiring a shell and executing a reverse merger or by participating in financings on terms highly unfavorable to the company.”
Pump and Dump Schemes Call for Charges
The complaint names John Stetson, Michael Brauser, Phillip Frost and Mark Groussman and their entities for running three “highly profitable” pump and dump schemes. Frost is the founder of Opko Health and a renowned biotech investor. None of the people alleged in the report have made public comments yet.
O’Rourke’s involvement along with Honig has brought enough damage to the company already. Soon after the news broke out, the company’s stock lost about 24 percent of value in after-market trading.
SEC also alleged that the two paid for a stock promotion. The complaint stated that Honig asked O’Rourke to write a promotional article, and O’Rourke published it on Seeking Alpha under the pseudonym “Wall Street Advisors.” O’Rourke falsely claimed not to have received compensation for the article.
Riot Blockchain CEO Out, Stock Price Falls by Over 24 Percent was originally found on [blokt] – Blockchain, Bitcoin & Cryptocurrency News.