[2018-02-17] SEC Suspends Trading of Three Companies With Ties to Cryptocurrency

[FollowSynergy]

The U.S. Securities and Exchange Commission (SEC) has suspended trading in the stocks of three companies with ties to cryptocurrency. One of the three is also planning an initial coin offering. The SEC says it is concerned about the nature of the companies’ business operations and the value of their assets.

SEC Suspends Trading of Three Stocks

The SEC has “suspended trading in three companies amid questions surrounding similar statements they made about the acquisition of cryptocurrency and blockchain technology-related assets,” the agency announced on Thursday. They are Cherubim Interests, PDX Partners, and Victura Construction Group. The three stocks are traded over-the-counter, with a market capitalization of less than $5 million each, according to Factset. The suspension is temporary, beginning on February 16 and ending on March 2.

The agency stated that the three companies issued press releases claiming that they have “acquired AAA-rated assets from a subsidiary of a private equity investor in cryptocurrency and blockchain technology, among other things.” However, the SEC says there are questions regarding the nature of the companies’ business operations and the value of their assets.

In addition, Cherubim Interests also announced that it will launch an initial coin offering (ICO). The trading suspension of this company’s shares is also due to its delinquency in filing annual and quarterly reports with the Commission.

Full article: https://news.bitcoin.com/sec-suspends-trading-companies-cryptocurrency/

[jjacob]

Halting ICO issuances because they have 'security-like' characteristics is fine. But companies which have followed all regulations and are listed companies should not be penalized. Stopping trading in these companies just because the SEC has doubts over the value of their assets seems to be stretching regulation too far. Investors value companies based on future growth potential and present value of their expected cash flows, not based on assets. The SEC should stop trying to micromanage things.

[secondgarlic]

Halting ICO issuances because they have 'security-like' characteristics is fine. But companies which have followed all regulations and are listed companies should not be penalized. Stopping trading in these companies just because the SEC has doubts over the value of their assets seems to be stretching regulation too far. Investors value companies based on future growth potential and present value of their expected cash flows, not based on assets. The SEC should stop trying to micromanage things.

Not sure about PDX and Victura, but doesn't the article say that Cherubim failed to submit annual and quarterly reports? In that case I would say that some sort of sanctions are definitely justified, no?

But in general I agree with your main points in that SEC appears to be too paranoid whenever they hear the word "cryptocurrency", no matter whether the regulations were followed or not.

[Harlot]

A company doing what its not intended to do is really a bad thing as they are also affecting other stockholders. Good job by the SEC on suspending them but I would prefer to de-list their companies in the stock exchange as they are totally violating rules. Also a company who is listed in the stock market does not need to have its own ICO as it is like having 2 kinds of stock in just one company which is not right. Hopefully SEC will find time on having set rules with regards to owning cryptocurrencies as assets of a company.

[1Referee]

That CEO must have a lot on his hands operating three companies, with all a shitty core business, shitty bookkeeping, and shitty cashflow, he is looking to boost everything (and more so himself) by initiating an ICO. It has a very bad smell to it, and I actually like the SEC stepping in. I however wish the SEC did that too on other non-crypto related occasions. In most cases the SEC is too late when it comes to preventing scams and ponzi schemes from harming innocent investors, which has resulted in them to lose a lot credibility. If they actually put an equal amount of effort into busting non-crypto schemes, they will then finally do what they are supposed to do.

[buwaytress]

That CEO must have a lot on his hands operating three companies, with all a shitty core business, shitty bookkeeping, and shitty cashflow, he is looking to boost everything (and more so himself) by initiating an ICO. It has a very bad smell to it, and I actually like the SEC stepping in. I however wish the SEC did that too on other non-crypto related occasions. In most cases the SEC is too late when it comes to preventing scams and ponzi schemes from harming innocent investors, which has resulted in them to lose a lot credibility. If they actually put an equal amount of effort into busting non-crypto schemes, they will then finally do what they are supposed to do.

Exactly, I think what the article fails to highlight properly (probably deliberately or we don't have a sensational news piece) is that they are being suspended not because of their crypto affiliation but simply because they're just terribly run businesses. It's evidence that if all the ICOs we've seen "gracing" our hallowed forum halls were to go through even a sampling of the due diligence normal IPOs need, I'm sure the vast majority wouldn't survive those rigours.

I'm all for regulations, to be honest, because the solid projects need not worry. I'd very much like to see a lot of these half-assed money-raking ventures slapping on crypto and blockchain labels go to jail. But you're right, if they applied the same suspicion to non-crypto companies, they'd net a lot more criminals.