The Securities and Exchange Commission recently announced it suspended trading in three companies amid questions surrounding similar statements they made about the acquisition of cryptocurrency and blockchain technology-related assets.
The SECs trading suspension orders state that recent press releases issued by Cherubim Interests Inc. (CHIT), PDX Partners Inc. (PDXP), and Victura Construction Group Inc. (VICT) claimed that CHIT, PDXP, and VICT acquired AAA-rated assets from a subsidiary of a private equity investor in cryptocurrency and blockchain technology among other things. According to the SEC order regarding CHIT, it also announced the execution of a financing commitment to launch an initial coin offering.
According to the SECs orders, there are questions regarding the nature of the companies business operations and the value of their assets, including in press releases issued beginning in early January 2018. Additionally, the Commission suspended trading in the securities of CHIT because of its delinquency in filing annual and quarterly reports.
In August 2017, theSEC warned investors to be on alertfor companies that may publicly announce ICO or coin/token related events to affect the price of the companys common stock.
This is a reminder that investors should give heightened scrutiny to penny stock companies that have switched their focus to the latest business trend, such as cryptocurrency, blockchain technology, or initial coin offerings, said Michele Wein Layne, Director of the Los Angeles Regional Office.
Under the federal securities laws, the SEC can suspend trading in a stock for 10 days and generally prohibit a broker-dealer from soliciting investors to buy or sell the stock again until certain reporting requirements are met.
The SEC appreciates the assistance of OTC Markets Group Inc. and the Financial Industry Regulatory Authority.
The SECs Office of Investor Education and Advocacy has produced aSpotlight on Initial Coin Offerings and Digital Assetsto provide investors with more information.