SEC suspends trading of company that focuses on bitcoin services

By Allen Cone  |  Dec. 19, 2017 at 3:49 PM
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Dec. 19 (UPI) -- The U.S. Securities and Exchange Commission has suspended trading of The Crypto Company over concerns of "potentially manipulative transactions" in the stock of the company offering services linked to bitcoin.

Trading of the stock, which has dramatically soared as the price of the cryptocurrency has risen, was suspended from Tuesday until midnight Jan. 3, the U.S. regulatory body said in a release. The stock price is worth more than 200 times what it was three months ago.

"The Commission temporarily suspended trading in the securities of The Crypto Company because of concerns regarding the accuracy and adequacy of information in the marketplace about, among other things, the compensation paid for promotion of the company, and statements in Commission filings about the plans of the company's insiders to sell their shares of The Crypto Company's common stock," the SEC said in a release. "Questions have also arisen concerning potentially manipulative transactions in the company's stock in November 2017."

The company, which says it "offers a portfolio of digital assets, technologies, and consulting services to the blockchain and cryptocurrency markets," was incorporated in March and went public in June by acquiring Croe, "a developmental stage fitness apparel company," primarily for sports bras.

The little-known company, based in Malibu, Calif., is worth more than $11 billion.

The stock last traded at $575 per share on Nasdaq on Monday. It closed at $22 on Dec. 4 and its highest price was $642 on Dec. 11.

The company had announced plans for a 10-for-1 stock stock split last week.

"We encourage everyone to be cautious and judicious when considering the purchase of our stock," CEO Mike Poutre said in a release last week. "There are a lot of companies taking advantage of the euphoria associated with this space, and we do not want be associated with them. We want people to pay attention to the business we are building, not the hype of a stock or the cryptocurrency world."

Other small companies linked to bitcoin have seen their stock surge dramatically.

The digital currency itself has soared 2,000 percent in the last 12 months. On Tuesday, its price was was trading 5.7 percent lower and dropped under $18,000 on Coinbase, the leading U.S. platform for buying, selling and trading major cryptocurrencies.

On Dec. 11, the commission's chairman, Jay Clayton, warned about the dangers of investing in cryptocurrencies and initial coin offerings.

"The world's social media platforms and financial markets are abuzz about cryptocurrencies and 'initial coin offerings,'" he said. "There are tales of fortunes made and dreamed to be made. We are hearing the familiar refrain, 'this time is different.' "

But he said, "a number of concerns have been raised regarding the cryptocurrency and ICO markets, including that, as they are currently operating, there is substantially less investor protection than in our traditional securities markets, with correspondingly greater opportunities for fraud and manipulation."

The SEC has yet to approve listing and trading any exchange-traded products holding cryptocurrencies or other assets related to cryptocurrencies.

Clayton also noted that significant trading of bitcoin may occur on systems and platforms outside its U.S. jurisdiction.

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