The US securities watchdog has put the kibosh on trading in three listed companies with ties to cryptocurrencies and blockchain. On Feb. 16, the US Securities and Exchange Commission (SEC) announced it had suspended trading in these entities — all three of which have the same CEO at the helm, Patrick Johnson — based on announcements revealing the way they did business and valued cryptocurrency and blockchain assets.
Cherubim Interests (CHIT), telecom company PDX Partners (PDXP) and holding companyVictura Construction Group (VICT) each had announced the acquisition of AAA-rated assets with convertible preferred stock from NVC Fund, a division of a cryptocurrency and blockchain-driven private equity investor. Meanwhile, CHIT, a construction and real estate development company, also revealed its plans for an upcoming ICO in which it planned to issue the SJT coin “for financial and societal gain,” all of which made its way onto the radar of the SEC.
The companies are considered penny stocks and trade in the OTC market. The SEC used the opportunity to repeat its warning to investors about listed companies jumping on the coattails of cryptocurrencies and blockchain to drive their shares higher.
“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, who leads the SEC’s Los Angeles regional office.
Meanwhile, CEO Johnson told Bloomberg:
“We did receive confirmation that they suspended trading this morning and that it will continue until March 2. We haven’t made any false claims about anything that we have put out.”
According to the three companies in question, the acquisitions of the crypto and blockchain assets from NVC with convertible preferred stock were expected to strengthen their respective balance sheets and were valued accordingly –
- CHIT – $250 million
- PDXP – $350 million
- VICT – $100 million
The SJT Coin
The status of the CHIT ICO, which is a housing project for “cooperative living and healthier lives,” remains unclear but it undoubtedly complicates matters for the company. CHIT touts a coin offering “extensible diversity in the use of the coin over current coins like bitcoins.” The company plans to use proceeds from the sale of the SJT coin to develop “self-containing intentional communities” across the United States and internationally.
US regulators and lawmakers have made the cryptocurrency market a top priority in 2018. In recent days, US commodities regulator the CFTC cautioned investors about fraudulent pump-and-dump schemes in which investors get swindled into investing in a worthless digital coin.
Recently publicly traded Eastman Kodak postponed its upcoming ICO for a stronger vetting process of potential investors