The CEO and Chairman of Riot Blockchain resigned Friday. John O’Rourke has served as the Chairman and CEO of Riot Blockchain since January 2017. Riot Blockchain is a cryptocurrency company who has seen its stock price experience dramatic fluctuations over the years. At the end of 2017, the price was over $30, but now it sits at less than $5. O’Rourke’s tenure in the role of CEO will end at a duration of just over 21 months, as he resigned from the role due to allegations from the US Securities and Exchange Commission.
This past week, the US Securities and Exchange Commission (SEC) launched charges against O’Rourke for fraud in connection with other individuals and companies. The SEC complaint, which was announced on Friday this past week, did not directly name Riot Blockchain, but rather a group of individuals. Among the ten individuals is Barry Honig, who was once the largest shareholder for Riot Blockchain. In total, the ten are alleged of heading a “long-running fraudulent scheme” which helped them bring in more than $27 million. Officially, the SEC claims that these ten individuals with a group of ten associated entities have participated in fraudulent stock sales schemes. The SEC has labeled these individuals as “microcap fraudsters”, which by definition is an individual who has committed fraud with the stock of a company that has a market capitalization of less than $250 million.
The SEC complaint went into more detail regarding the allegations, saying, “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.”
CNBC attempted to reach out to those charged in the complaint but were not able to get in contact with them.
Officially, the list of twenty individuals and entities contains Barry Honig, John Stetson, Michael Brauser, John R. O’Rourke III, Mark Groussman, Phillip Frost, Elliot Maza, Robert Ladd, Brian Keller, John H. Ford, Alpha Capital Anstalt, ATG Capital LLC, GRQ Consultants Inc., HS Contrarian Investments LLC, Grander Holdings Inc., Melechdavid Inc., OPKO Health Inc., Frost Gamma Investments Trust, Southern Biotech Inc., and Stetson Capital Investments Inc.
As a result of the SEC complaint, Riot Blockchain’s stock price dropped nearly 25% in Friday trading. In addition, Chris Ensey has been named as the interim CEO and Remo Mancini is the new chairman of the board. While the SEC complaint does not directly call out Riot Blockchain, tough times may be facing the company as the most recent annual report claimed the company may never become profitable.