The CEO of Riot Blockchain, John O’Rourke has tendered his resignation after the SEC charged him and others with a multimillion-dollar case of unrelated fraud.
It’s clear that as blockchain technology continues to break new ground, more businesses want a piece of the action. In fact, a previous trend involved changing your business name to have something to do with blockchain à la Long Island Iced Tea.
Riot Blockchain Under Scrutiny
Last year saw Bioptix change its name to Riot Blockchain. From dealing in biotech, the newly named company began shifting focus to cryptocurrencies and investing in blockchain-based platforms. Along with this change came a healthy stock price increase. However, some shareholders. including CEO John O’Rourke, thought that this would be an opportune time to sell. He netted about $869,000.
Now, dodgy as this may seem, O’Rourke had a vague reason. He said:
Basically, I sold less than 10 percent of my overall position. And I was doing it for tax obligations.
This seemed a bit suspicious to some as did the fact that the company’s auditor was dismissed. Another point of concern was that annual shareholder meetings seem to have an annoying habit of being postponed. The U.S. Securities and Exchange Commission (SEC) also got involved by requesting additional documentation from the pet medicine-turned-blockchain business.
Million-Dollar Schemes
Now, according to CNBC, the company has been dealt another blow. O’Rourke has resigned from Riot Blockchain amid unrelated fraud charges brought against him and others. Although the platform is not part of the SEC complaint, one of its previous shareholders, Barry Honig, is.
According to the SEC, the commission charged 10 “microcap fraudsters” and their related entities with fraud schemes bringing in over $27 million.
The complaint stated:
Honig was the primary strategist, calling upon other Defendants to buy or sell stock, arrange for the issuance of shares, negotiate transactions, or engage in promotional activity. In each scheme, Honig orchestrated his and his associates’ acquisition of a large quantity of the issuer’s stock at steep discounts, either by acquiring a shell and executing a reverse merger or by participating in financings on terms highly unfavorable to the company.
The SEC’s complaint relates to “three highly profitable ‘pump-and-dump’ schemes perpetrated by Honig, [John] Stetson, [Michael] Brauser, O’Rourke, [Mark] Groussman, and [Phillip] Frost, and their entities.”
The statement continued:
Honig then directed O’Rourke to write a promotional article, which O’Rourke published under the pseudonym ‘Wall Street Advisors’ on Seeking Alpha.
O’Rourke denied receiving compensation for the article as did John Ford, who also wrote a promotional article as per Honig’s instruction.
Chris Ensey has taken over as CEO at Riot Blockchain, but tough times seem to be up ahead. The latest annual report cautioned stakeholders that the company “may never become profitable.” Perhaps not the ideal words a new CEO wants to hear, but it could be a driving force to hopefully make the platform a success.
What do you think the future holds for Riot Blockchain? Let us know in the comments below!
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