The SEC continues its gradually more visible presence in digital finance and today suspended trading in an obscure digital currency company whose shares surged more than 17,000 percent in less than three months, making paper billionaires out of top executives. As Bloomberg reports:
In a Tuesday order halting buying and selling of The Crypto Co., the Securities and Exchange Commission said it was worried investors aren’t getting accurate disclosures or enough information about the company. Questions have also arisen about “potentially manipulative transactions” involving the Malibu, California-based company’s shares, the SEC said.
The company invests in digital assets, and is developing source code for managing them, according to regulatory filings. At the end of September, it held crytocurrencies worth $900,110, filings show. Bitcoin, the biggest digital currency, was trading for about $4,171 at the time, but has since surged to more than $18,220.
What were the red flags? Apparently, compensation—and plans by the company’s insiders to sell their shares (which are themselves traded over-the-counter).