SEC Suspends Trading in Three Issuers Claiming Involvement in Cryptocurrency and Blockchain Technology

Regulatory attention continues to remain focused on claims promoting cryptocurrency and blockchain technology. On February 16, 2018, the United States Securities and Exchange Commission (the “SEC”) suspended trading in three (3) companies amid questions regarding claims that the companies received investment grade debt from a subsidiary of a private equity investor in cryptocurrency and blockchain technology. The SEC’s trading suspension order states that recent press releases issued by Cherubim Interests Inc. ( “CHIT”), PDX Partners Inc., and Victura Construction Group Inc. claimed that they acquired AAA-rated assets from a subsidiary of a private equity investor in cryptocurrency and blockchain technology. The SEC’s orders indicate that there are questions regarding the nature of the companies’ business operations and the value of their assets in early January 2018. The SEC also suspended trading in the securities of CHIT because of its delinquency in filing annual and quarterly reports. Under the federal securities laws, the SEC can suspend trading in a stock for ten (10) days until certain reporting requirements are met.

“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,” said Michele Wein Layne, Director of the SEC’s Los Angeles Regional Office.

If you have questions regarding the Alert, please contact Dan Viola at 212.573.8038, dviola@sglawyers.com.

SEC Press Release – February 16, 2018

https://www.sec.gov/news/press-release/2018-20

SEC Alert – August 2017

https://www.investor.gov/additional-resources/news-alerts/alerts-bulletins/investor-alert-public-companies-making-ico-related

SEC’s Office of Investor Education and Advocacy Spotlight

https://www.investor.gov/additional-resources/specialized-resources/spotlight-initial-coin-offerings-digital-assets