Riot Blockchain CEO resigns after SEC charges him with fraud
According to a report by CNBC, the CEO and chairman of the blockchain company, Riot Blockchain, John O’Rourke has resigned in the wake of charges brought by the U.S. Securities and Exchange Commission (SEC) against him for running fraudulent schemes that brought over $27 million.
Riot Blockchain released a press statement on Saturday naming Chris Ensey as its interim chief executive officer. Ensey previously served as Riot’s chief operating officer. The move is part of a “restructuring of the company’s senior executives,” Riot said in a release. Ensey is expected to continue to aggressively pursue the exploration of the Company’s RiotX digital currency exchange under license from Coinsquare.
The restructuring has led to current Lead Director Remo Mancini being appointed as Chairman of the Board of Directors.
Though Riot was has not been named in the compaint, the company didn’t specify any reason for the resignation.
‘Honig and Rourke were the main protagonists’
The Securities and Exchange Commission (SEC) announced on Friday charges against a group of 10 individuals for running fraudulent schemes over a period of time that brought in over $27 million. Two of those charged were John O’Rourke, CEO of Riot Blockchain, and Barry Honig, once Riot’s largest shareholder.
“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,” according to the SEC complaint.
“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,” it added.
The SEC brought the action for “three highly profitable ‘pump-and-dump’ schemes perpetrated by Honig, [John] Stetson, [Michael] Brauser, O’Rourke, [Mark] Groussman, and [Phillip] Frost, and their entities,” the complaint alleged.
“Honig then directed O’Rourke to write a promotional article, which O’Rourke published under the pseudonym ‘Wall Street Advisors’ on Seeking Alpha,” the complaint said. “[O’Rourke] also knowingly and falsely claimed ‘not receiving compensation'” for writing the article.
Riot Blockchain is a cryptocurrency company whose stock price skyrocketed after it changed its name. Its stocks have gone down by 24 percent after the resignation came to light.
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