According to a report published on Feb 28, 2018, in Wall Street Journal, it was reported that SEC (Security and Exchange Commission) had a close look at all the companies that dabble in Blockchain.

The commission issued lots of court orders on March 7, 2018. It also started to request information from various individuals who were involved in the ever-changing crypto world. This informational sweep had all its attention on ICO’s, blockchain, second market trading, and cryptocurrencies.

More specifically, they wanted their token sales structure and pre-sale elements details with them.

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Top 5 Sec Blockchain Investigations Image Credits: SEC

Did you know that the price of BTC was off about 3% as soon as the report by WSJ came out? AS ICO’s is a multibillion-dollar market, more than $5.6 billion was raised by them and $1 also got added until the investigations were started.

The SEC said that it would continue to focus on the platforms that offer the trade of digital assets, operate as an ‘exchange’, as defined by the federal laws. They looked into the sales that involved SAFT’s, which promised to distribute the tokens in exchange for funds.

During a speech given by SEC Chairman Jay Clayton, he said that – I doubt anyone who thinks that it is acceptable for a company with no records in continuing the distribution ledger, changing the names, and offering securities without providing enough data to the investors.

After all the information sweeps done, here are the top five SEC investigations of Blockchain in 2018.

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Top 5 Blockchain SEC Investigations

1. SEC Issued Subpoena To Riot Blockchain

Riot Blockchain Sec Investigation
Image Credits: RiotBlockchain

The SEC issued a subpoena in regard to the Riot Blockchain whose stock simply skyrocketed after bringing a change in its name. Until October, its name was Bioptix, and it was known to have the veterinary product’s patent.

The annual 10k report of this blockchain company disclosed that it received SEC subpoena on April’ 9,2018, that requested some information from the company. The report also said that they also intend to cooperate with all SEC requests.

Though the Chairman of Riot, John O’Rourke did not respond immediately, but in a press release, he said- we are continuing to focus on the expansion of cryptocurrency mining and the investigation for starting an exchange in the United States. He added that the company sees an opportunity for demand and supply between the mining operations and exchange.

But Jay Clayton warned that it is not acceptable for the companies to start working with blockchain, change their names, and offer securities without providing details about the risks involved.

And as Riot had not been in this business for a long time, the company said that it has no profits and expects to see losses in future. Riot also stated that it might never become profitable, and even if the company achieves profitability in future, it may not be able to sustain it in the subsequent periods. Source

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2. SEC Halts A Fraud ICO From Titanium Blockchain That Raised $21 Million

Titanuim Blockchain Sec Investigation
Image Credit: Titanuim Blockchain

On May 29, 2018, SEC announced that it had obtained a court order to stop an ongoing fraud that involved an ICO, which raised $21 million from investors in and out the United States.

According to an SEC complaint, The CEO of Titanuim Blockchain, Michael Stollaire, lied about the business relationships with several prominent companies. The ICO also promoted its relationship with the Federal reserves and firms like Verizon, PayPal, The Walt Disney Company, and Boeing. The complaint says that the website of this blockchain also had false testimonials from clients.

Robert A. Cohen, Chief of the SEC Enforcement Division’s Cyber Unit said that the ICO was based on a social media marketing. They tried to deceive the investors with fictional claims of their business prospects.

This complaint charged Titanium and Stollaire company of violating the federal laws. The investigation is done by David S. Brown and is supervised by the SEC’s Market Abuse Unit with supervision by Mr Cohen. Source

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3. SEC Emergency Freezes $27 Million Of A Cryptocurrency Company Longfin

On April 6, 2018, SEC has also obtained another court order for freezing more than $27 million in trading from sales and illegal distributions of restricted shares of Longfin Corp stock.

It also acquired that is a blockchain company that says itself as a solution for the global warehousing industry.

According to the complaint by SEC- On 13th December of 2017, Longfin started trading on NASDAQ, its stock prices rose up to 230 percent in a single day, 2000% over two days and market capitalization exceeded to $3 billion. This rise in price drew the attention of everyone and shortly after the price hike; SEC launched an investigation into the matter on April’4, 2018.

SEC says that there are individuals who have sold the restricted Longfin to the public. And hence made more than $27 million in profits.

The complaint states that the CEO of this cryptocurrency company, Venkata Meenavali issued more than two million unregistered shares to the company’s corporate secretary.

Now the chief of the SEC Enforcement Division Cyber Unit, Cohen said that we took an action to prevent those $27 million to move out of the country. The result of this investigation is not out as a team of SEC is continuing its investigation on this case.

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4. Long Island Iced Tea Soars 280% After Changing Its Name To Long Blockchain

Long Island - Blockchain SEC Investigations
Image Credits: Long Blockchain

Long Island Iced Tea is an American Corporation that is owned by the subsidiary of Long Island Brand Beverages. It is also a stock that shot up to 280% as its name changed to Long Island Blockchain Corp. The stocks got closed at $2.46 one day before, and simply skyrocketed to $7.45 as its name came out. The trading value also had more than 12.5 million shares, while the daily rate was 170,220 shares.

Long Island Iced Tea rebranded due to the corporate shift and for the new investment opportunities that can get the best of benefits of blockchain technology. It is also evaluating other prospects and opportunities that include various infrastructure services for the finance and blockchain industry.

The press release by NASDAQ also stated that- there is no assurance given that the definitive agreement will come into action. In other words, as Long Island Iced Tea evaluates the blockchain industry, it will still continue to make beverages.

In September 2017, the company has also signed an agreement to increase their business in Europe and Australia.

But on April 10, 2018, this blockchain company received a letter that its stock will not be considered as applicable by the NASDAQ stock exchange.

Now the shares of this company will only be eligible for trades over the counter. And the company has also dropped its plans to purchase Bitcoin mining equipment.

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5. SEC Has Suspended The Trading of Bitcoin Stock

The Crypto Company - Blockchain SEC Investigations
Image Credit: The Crypto Company

The Securities and Exchange Commission suspended the trading rights of The Crypto Company in December 2017.  The commission had serious concerns regarding their information; especially the accuracy of data about the amount paid to promote the firm for sales.

The Crypto Company is the first public company in the blockchain sector that comply with all the governance and accountability standards.

But as he shares of this company surged to nearly 160%, the traders made high bids for the Bitcoin price.

And then this company planned to divide the stock in the ratio of 10:1 so that it becomes affordable for average investors as well.

According to a 10-1 split, it might have an increase of 10 and decrease in price by $57.50. The CEO said that company wanted to see the activity for the stock and also wanted people to pay attention to their business.

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Final Thoughts:

After all these name change scams and frauds coming up in the cryptocurrency world; SEC has taken huge steps and investigations to reach their root cause. The SEC investigations for various blockchains and ICO’s are still going on and we definitely hope for the best results.


*Disclaimer: The article should not be taken as, and is not intended to provide any investment advice. Claims made in this article do not constitute investment advice and should not be taken as such. 101 Blockchains shall not be responsible for any loss sustained by any person who relies on this article. Do your own research!