The U.S. Securities and Exchange Commission on Friday suspended trading in shares of three companies due to questions about their recent PRs which advertised the buyout of cryptocurrency and Blockchain -related assets.
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The financial regulator cited concerns regarding the accuracy and adequacy of information about acquiring top rated assets from a cryptocurrency investor, among other things. Perhaps that piqued the regulator’s concern, in particular after on of the suspended firms also announced plans to arrange an Initial Coin Offering (ICO) ).
The US top regulator warned investors against throwing money into the digial crowdsale because the organizers intended to launch a cryptocurrency-based investment scheme without even attempting to follow US securities laws.
The Commission temporarily suspended trading in the securities of Cherubim Interests Inc. (CHIT), PDX Partners Inc. (PDXP), and Victura Construction Group Inc.
The SEC’s decision comes as interest in the technology that underpins bitcoin and other virtual currencies has emerged as a powerful investing theme. Several firms saw its stocks price almost triple in a day just for adding the word ‘blockchain’ to their brand names or announcing plans to launch technology-based products.
Ironically, in January, the SEC told the first blockchain ETFs in the last minute to tweak their names and erase the word ‘blockchain’.
The regulator insisted on the name changes as investors seem desperate for any kind of blockchain exposure, to the point where many startups that put the word blockchain, or other cryptocurrency terms, into their name have seen their share prices soar.
Analysts compared the trend with what happened during the tech bubble, where many the technology firms got a strong boost just for adding ‘dot-com’ to their brand name.
Michele Wein Layne, Director of SEC’s Los Angeles Regional Office, commented: “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.”
