SEC’s Riot Blockchain Inquiries Continue

Riot Blockchain (NASDAQ:RIOT) remains under hot water by the US Securities and Exchange Commission (SEC).

On Tuesday (August 14), the company filed its 10-Q quarterly report to the SEC and revealed additional information about the SEC’s ongoing investigations into its business practices.

The filings indicate the SEC is investigating several of the company’s registration statements in addition to its interests in Coinsquare, a Canadian-based cryptocurrency exchange.

Riot Blockchain also indicated in the document that the SEC’s Division of Corporation Finance and Division of Investment Management have also made a number of inquiries into the company’s cryptocurrency mining efforts. Up until October of last year, Riot Blockchain was a biotech company that went by the name of Bioptix Diagnostics.

By early 2018, the company was already in trouble with lawsuits and SEC investigations making headlines, claiming the company manipulated its share price by adding ‘blockchain’ to its title when it didn’t have any knowledge or background in the industry.

“The comments raise matters related to, among other things, the unsettled nature of accounting treatment for the Company’s cryptocurrency mining and the fair value method selected by the Company (as opposed to intangible accounting methods proposed by some experts) and applicability to the Company of the Investment Company Act of 1940, particularly as relates to the Company’s minority interest in goNumerical, Inc. a/k/a Coinsquare,” the filing released on Wednesday said.

Riot Blockchain said in the document that it is “engaged in conversations” with the SEC’s Division of Enforcement, Division of Investment Management and Division of Corporation Finance and that the company intends to fully cooperate with the investigation.

“Management is unable to make a meaningful estimate of the overall impact on the company’s operations, if any, that would result from an unfavorable final determination of these matters or the investigation of the company,” the filing read.

The company also revealed in the fling that it received a letter from the SEC on July 30 advising that action had begun pursuant to Section 8(e) of the Securities Act of 1933. The act declares that the SEC can issue a stop order if it determines untrue statements have been made or facts have been omitted.

As a result, the stop order means no shares of the company can be traded or sold under specific registration statements.

Shares of Riot Blockchain subsequently fell nearly 20 percent as of market close on Wednesday to US$5.35. After-hours trading brought its share price down 0.93 percent to US$5.30 as of 5:41 p.m. EST.

Analyst consensus on TipRanks currently puts the company at a “moderate buy” based off one analyst rating, which was most reiterated 21 days ago. Riot has an average price target of US$10.

On TradingView.com, however, the company is ranked as a “strong sell,” with 17 against, eight “neutral” and one “buy.”

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Securities Disclosure: I, Jocelyn Aspa, hold no direct investment interest in any company mentioned in this article.