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Crypto company's stock plunges on SEC probe

Many companies trying to ride the crypto wave are faring even worse than bitcoin itself.Riot Blockchain's stoc...

Posted: Apr 19, 2018 10:47 PM
Updated: Apr 19, 2018 10:47 PM

Many companies trying to ride the crypto wave are faring even worse than bitcoin itself.

Riot Blockchain's stock has plummeted 77% in 2018. (Bitcoin prices have plunged 40% in 2018.)

The bursting of the bitcoin bubble clearly is hurting Riot Blockchain. But news worsened when the company disclosed to investors Wednesday that it had received a subpoena from the Securities and Exchange Commission.

The stock has fallen more than 10% in just the past two days ... and the worst may not be over.

Riot Blockchain used to be called Bioptix. It made fertility hormones for cows, horses and pigs. And it still does.

But Bioptix changed its name to Riot Blockchain last October and said its new focus "will be as a strategic investor and operator in the blockchain ecosystem with a particular focus on the Bitcoin and Ethereum blockchains."

The stock surged from about $5 a share to a high of $46.20 by December. Then cryptocurrencies, including bitcoin, ethereum, ripple and litecoin, started sinking. It's been all downhill for Riot Blockchain ever since.

Related: SEC suspends trading of once red-hot bitcoin stock

The company said in an SEC filing it "believes that many companies engaged in blockchain and cryptocurrency businesses have received subpoenas from the SEC which presents an additional industry risk."

Riot Blockchain added "the existence of an investigation ... could have a materially adverse effect on the company, its business or operations, and the industry as a whole."

Making matters worse, Riot Blockchain disclosed that the Nasdaq has warned it will delist the company's stock if it fails to hold an annual shareholder meeting soon.

The company said it did not have a quorum of shareholders but hoped to be able do so at a reconvened meeting it plans to hold no later than the middle of next month. But Riot Blockchain said there were no assurances it could get a quorum this time either.

Riot Blockchain is hardly the only company guilty of trying to cash in on the crypto craze.

Eastman Kodak -- yes, the camera and film company -- launched its own KodakCoin.

LongFin, a financial tech firm that recently went public, and initially skyrocketed after announcing that it bought a blockchain microlender, has lost nearly half of its value this year.

A company called Long Blockchain, which used to be known as Long Island Iced Tea, has plunged nearly 90%.

And shares of a small company called Nodechain have dropped by more than 90% this year too. Nodechain got into the cryptocurrency mining business last December. Before that, it was a maker of electronic cigarettes called Vapetek.

That's one reason why the SEC and other regulators around the world are taking steps to crack down on fraud by companies seeking to take advantage of bitcoin mania, particularly those that are trying to raise money through initial coin offerings, or ICOs.

Related: Bitcoin plunges as social media cracks down on ICO ads

In an ICO, a company is selling digital currencies, as opposed to stock, to investors. But these sales are not regulated by the SEC as share offerings are in an initial public offering or IPO.

Regulators aren't the only ones growing more leery of cryptos though. Last month, Twitter banned ads for ICOs and token sales. Google also last month that it will begin restricting some crypto ads in June.

And Facebook announced in January it was prohibiting the sale of ads that "promote financial products and services that are frequently associated with misleading or deceptive promotional practices" -- which included ICOs and bitcoin.

So if the bitcoin bust continues, Riot Blockchain may find the business of helping get farm animals pregnant isn't so bad after all.

Minnesota Coronavirus Cases

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Reported Deaths: 7620
CountyCasesDeaths
Hennepin1248631774
Ramsey52480895
Dakota46804470
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Washington27416291
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St. Louis18137312
Scott17548135
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Cook1720

Iowa Coronavirus Cases

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Cases: 370914

Reported Deaths: 6048
CountyCasesDeaths
Polk58232640
Linn21204339
Scott20306247
Black Hawk16119312
Woodbury15238230
Johnson1461585
Dubuque13506211
Dallas1128999
Pottawattamie11223174
Story1071448
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Clinton561493
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Webster515494
Muscatine4880106
Marshall486676
Des Moines467271
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Jasper421172
Plymouth402981
Lee382356
Marion366076
Jones300957
Henry294637
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Carroll286852
Crawford268540
Boone268434
Benton259655
Washington256751
Dickinson249344
Mahaska232351
Jackson225242
Clay216627
Kossuth216166
Tama211871
Delaware210943
Winneshiek198535
Page194522
Buchanan193733
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Hardin187444
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Hamilton181851
Harrison179973
Clayton171057
Butler166235
Madison164619
Mills163724
Floyd163342
Cherokee159338
Lyon158841
Poweshiek157036
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Hancock150234
Iowa149824
Winnebago144531
Cass139255
Calhoun138913
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