SEC Suspends Three Blockchain/Crypto Companies, Cites Murky Recent Acquisitions

Crime, Investing, News | February 16, 2018 By:

The US Securities and Exchange Commission today suspended trading in three companies because of questions on similar statements they made about the acquisition of cryptocurrency and blockchain assets.

The SEC’s trading suspension calls into question recent press releases issued by Cherubim Interests Inc. (CHIT), PDX Partners Inc. (PDXP), and Victura Construction Group Inc. (VICT).

The SEC claims that the releases state that the companies acquired AAA-rated assets from a subsidiary of a private equity investor in cryptocurrency and blockchain technology, among other things.

The SEC order regarding CHIT also claimed the company mentioned a financing commitment to launch an initial coin offering.

The SEC said there are questions regarding the nature of the business operations and the value of the three companies’ assets, based on press releases issued beginning in early January.  Additionally, the Commission suspended trading in CHIT because of its delinquency in filing annual and quarterly reports.

In August 2017, the SEC warned investors to be on alert for companies that may publicly announce ICO or coin/token-related events to affect the price of the company’s common stock.

“This is a reminder that investors should give heightened scrutiny to penny stock companies that have switched their focus to the latest business trend, such as cryptocurrency, blockchain technology, or initial coin offerings,” said Michele Wein Layne, Director of the Los Angeles Regional Office.

Under the federal securities laws, the SEC can suspend trading in a stock for 10 days and generally prohibit a broker-dealer from soliciting investors to buy or sell the stock again until certain reporting requirements are met.