Riot Blockchain Inc (NASDAQ:RIOT) shares tumbled by 34% recently after CNBC broadcast reported that the rebranding of the company was specially done for enriching the people who are controlling the company. The former biotech-equipment maker is now facing a lawsuit from shareholders who are stunned after the explosive report from CNBC.
It should be noted that the shares of the company increased four times quadrupling to a high of $46.20 after the company rebranded itself changing its name from Bioptix Inc in October last. The company release stated that its focus now would be mostly on blockchain startups and cryptocurrencies. However, the hype did not last long as the stock tumbled to more than half of its value from the peaking of Bitcoin’s shares on Dec. 18.
It raised concern among the investors who fear that the company is not doing must other than issuing press releases. CNBC’s report hit the last blow when it raised a series of red flags and even pointed out that the Chief Executive Officer of Riot; John O’Rourke’s selling of 869,000 shares almost three months ago after the rebranding stint is a part of some scheme.
O’Rourke on the other hand immediately cleared the suspicion by saying that the sale was meant for tax purposes. When comments were asked for him following the sale of the shares, the CEO said that it was garbage, biased hit piece and that he has never felt better about their business, assets and positioning at the frontline of the blockchain technology.
Riot To Acquire Bitcoin Mining Equipment; Face Shareholders’ Wrath
Recently Riot announced that it has signed an agreement for acquiring Bitcoin mining equipment. A few days ago, the company announced that it will be launching a digital-currency exchange and a futures brokerage.
The news stated that a Manhattan law firm has filed a shareholder suit against Riot claiming that the company and its executives have made materially false and misleading statements about the operations, business and compliance policies of the company. So, there is a lot to worry about Riot from allegations to the lawsuit.