Riot Blockchain Inc (NASDAQ:RIOT), the biotech turned blockchain company, has appointed a new CEO in the wake of the forced departure of its previous boss who is being accused by US regulators of securities fraud.
Chief Operating Officer Chris Ensey has been tapped to take the helm of the company after the Securities and Exchange Commission charged that Riot’s former chief John O’Rourke was involved in overseeing a series of long-running pump-and-dump schemes.
Remo Mancini has been appointed as the new chairman of Riot’s board as part of the abrupt management shakeup.
The SEC on Friday unveiled charges against 10 individuals and their associated organizations with taking part in fraudulent schemes being run out of South Florida that generated as much as US$27mln.
The fraudulent operation, which involved O’Rourke, was led by investor Barry Honig, formerly Riot’s biggest shareholder, according to the SEC.
This group of “microcap fraudsters” are accused of manipulating the share prices of stocks in three unidentified companies by acquiring large quantities of shares in the stock at deep discounts.
After doing so, Honig and his associates illegally promoted the stocks and engaged in manipulative trading to artificially boost the price of shares and create the appearance of active trading volumes, according to the SEC.
Shares were then dumped into the inflated market to allow for the reaping of millions of dollars in profits at the expense of other investors.
Read: Riot Blockchain falls below 2Q estimates as SEC inquiry continues
“As alleged, Honig and his associates engaged in brazen market manipulation that advanced their financial interests while fleecing innocent investors and undermining the integrity of our securities markets,” said Sanjay Wadhwa, senior associate director with the SEC’s Division of Enforcement, in a statement.
O’Rourke, who was formerly at the helm of Riot since last November, resigned following the charges.
Riot Blockchain was not accused by the SEC of wrongdoing. However, the Colorado-based company, which saw its stock price soar after changing its focus to cryptocurrency, was subpoenaed by US regulators last April for information regarding its financial statements.