When Bioptix Inc. changed its name to Riot Blockchain Inc., investors flooded in to the company they thought was working on blockchain technologies. CNBC says the change may have been made simply to enrich Bioptix’s founders. Bloomberg reports:
The shares had more than quadrupled to as high as $46.20 after the company changed its name from Bioptix Inc. in October and said it would focus on cryptocurrencies and blockchain startups. But the euphoria didn’t last long and the stock has lost more than half of its value since Bitcoin’s Dec. 18 peak, on concern the company isn’t doing much more than issuing press releases.
CNBC raised a series of red flags, including Riot Chief Executive Officer John O’Rourke’s sale of 869,000 shares less than three months after the name change. O’Rourke had previously said the sale was for tax purposes.
“This was a garbage, biased hit piece,” O’Rourke wrote in an e-mailed response to a Bloomberg News request for comments. “I have never felt better about our business, our assets, and our positioning at the forefront of blockchain technology.”
Riot said yesterday it entered into an agreement to acquire Bitcoin mining equipment. It announced plans last week to launch a digital-currency exchange and a futures brokerage.
The CNBC report also chronicled the involvement of investor Barry Honig, who accumulated 700,000 warrants which he could convert to stock at $3.56 a share, and 700,000 promissory notes that he could convert to stock at $2.5 a share, CNBC said, citing SEC filings. The move proved prescient as the stock shot over $40.
The shares fell to as low as $11.36 in New York trading Friday.
Read more here.
Jeremy Jones, CFA
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