Riot Blockchain Faces Class Action Suit
Riot Blockchain, Inc. (RIOT), which was previously a biotechnology company known as Bioptix, Inc., is facing a class action lawsuit with charges of artificially inflating prices of its securities with false and misleading statements.
Prior to October 2017, Riot was known as Bioptix that specialized in the development of veterinary diagnostic tools. On October 4 last year, Bioptix announced its decision to change name and shift business focus to investing in and operating blockchain technologies with a particular focus on Bitcoin and Ethereum.
The lawsuit, filed by Robbins Geller Rudman & Dowd LLP in the Southern District of Florida, charges the company, its officers and one of its major shareholders with violations of the US Securities Exchange Act of 1934.
The filing said the prices of Riot’s securities were artificially inflated due to the defendants’ false statements and omissions during the period, with its stock trading at more than $38 per share.
The defendants also failed to disclose that the company had changed its name to Riot Blockchain in order to generate investor enthusiasm and tie the Company to the recent rise in the price of cryptocurrencies. At that time, the company didn’t have a significant blockchain business, the lawsuit noted. The move allowed Riot’s controlling shareholder Barry Honig and his associates to sell their Riot securities at artificially inflated prices.
In addition, according to the complaint, Honig and other investors were effectively controlling Riot and its operations and exerting undisclosed influence over the company and its CEO.
In recent months, the share prices of many little-known companies have surged after they announced plans to enter the bitcoin industry or something related on blockchain technology.
In late January, the U.S. SEC Chairman Jay Clayton had said the regulator was closely watching public companies, which change their name or business model to something blockchain-related in a bid to cash in on the ongoing cryptocurrency mania.
In December, the Long Island Iced Tea Corp. had seen its shares surge around 430 percent in a single day after it changed its name to Long Blockchain Corp. On February 15, Long Blockchain received a notice from Nasdaq stating that it had determined to delist the company’s securities.
The SEC had also temporarily suspended trading of Crypto Co. as its stock surged more than 2,700 percent after signing a deal to buy a cryptocurrency data platform.
by RTT Staff Writer
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