Thursday, September 29, 2022

SEC Issues Subpoena to Crypto Company Riot Blockchain

SEC Issues Subpoena to Crypto Company Riot Blockchain

The Securities and Exchange Commission (SEC) has issued a subpoena to Colorado-based cryptocurrency venture Riot Blockchain. The subpoena, which is asking for “certain information,” was first filed on April 9th.

Also see: NYT Crypto Writer Nathaniel Popper Hears Chatter of ICO ‘Safe Harbor’

Join the Bitsonline Telegram channel to get the latest Bitcoin, cryptocurrency, and tech news updates:

Representatives of Riot Blockchain have explained that while they are willing to cooperate with the SEC, the process is going to cost them excessive amounts of time and money:

“Response to the subpoena will entail cost and management’s attention. The existence of an investigation of the company specifically and the industry generally could have a materially adverse effect on the company, its business or operations, and the general industry.”

An Unusual History

The company “emerged” last October after it changed its name from Bioptix Inc. and turned away from its original business — medical devices — to “focus on the Bitcoin and Ethereum blockchains.” The change allegedly caused massive jumps in the company’s stock, though a CNBC investigation of Riot uncovered “several red flags in the company’s SEC filings that might make investors leery.” The platform also noted that the company canceled a planned shareholders meeting in Florida at that time.

Riot Blockchain’s chairman John O’Rourke has since accused CNBC of publishing a “negative, one-sided piece,” and the shareholders meeting has been rescheduled for early May in Oklahoma City, Oklahoma, where Riot maintains a bitcoin mining facility.

A Lot of Change Since Switching to Crypto

In the company’s most recent 10-K filing, documents explain that the company lost nearly $20 million USD in 2017, including roughly $3.5 million on discontinued medical devices.

Last February, the enterprise made headlines that it was reportedly purchasing a Miami-based futures brokerage firm known as Logical Brokerage Corp. to create a futures brokerage option and a digital currency exchange. In a recent news release, O’Rourke commented:

“We continue to focus on the expansion of our cryptocurrency mining operations and the active investigation of launching a cryptocurrency exchange in the United States. We see a strong integration opportunity of supply and demand between our mining operation and a potential exchange.”

We Don’t Make Any Money!

However, executives have also stated that Riot Blockchain does not currently stand as a profitable business, which is causing a few raised eyebrows among initial investors. In fact, they expect to incur further losses in the foreseeable future as the business continues to develop but also warned that operations may “never become profitable.”

“Even if we achieve profitability in the future, we may not be able to sustain profitability in subsequent periods,” they added.

Does Riot Blockchain’s operations sound a bit strange or shady? Post your comments below.

Images via CNBC, AVVO

Bitsonline Email Newsletter