The U.S. Securities and Exchange Commission (SEC) has suspended the trading of a Bitcoin-focused firm’s shares after their prices rose almost 7,000% this year. Following the Commission’s suspension, some law firms started their own investigations on behalf of shareholders, including a class action lawsuit.
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The SEC announced on Wednesday the temporary suspension of trading in the securities of First Bitcoin Capital Corp (BITCF). The Canadian corporation’s trading suspension began on August 24 at 9:30 a.m. EDT and will end on September 7 at 11:59 a.m. The SEC wrote:
The Commission temporarily suspended trading in the securities of BITCF because of concerns regarding the accuracy and adequacy of publicly available information about the company including, among other things, the value of BITCF’s assets and its capital structure.
First Bitcoin Capital Corp’s stated goal “is to acquire Bitcoin start-ups,” and to “raise funding and invest in companies that are developing Bitcoin software or hardware applications,” its website describes. The company plans to operate in a number of segments in the cryptocurrency space, including investing in bitcoin mining equipment and providing liquidity to bitcoin exchanges globally. It also plans to develop online stores that only accept bitcoin.
In addition, the company has a wholly-owned subsidiary called Coinqx.com which is a digital currency exchange that plans to offer a cryptocurrency wallet, its website details.
Price Jumped ~7000% in 2017
The Vancouver-based BITCF is listed over-the-counter, on OTC Markets under the symbol BITCF. The shares were trading at $1.79 at the time of suspension. However, they were trading at $0.37 on August 1, before skyrocketing to $3.15 on August 14 briefly. A few days later, they fell below $1. At the beginning of 2017, they were trading at $0.045, for which the August all time high price of $3.15 represents almost a 7,000% increase.
As an OTC security, BITCF is not required to file information with the SEC. However, OTC Markets’ electronic inter-dealer quotation system called “OTC Link” is registered with the Commission as a broker-dealer and as an alternative trading system. OTC Link is also a member of the U.S. Financial Industry Regulatory Authority (FINRA).
Class Action Lawsuit Ensues
Following the SEC’s suspension, two law firms started investing First Bitcoin Capital Corp. Rosen Law Firm, specializing in global investor rights, announced on Thursday that it is investigating potential securities claims on behalf of BITCF shareholders. This investigation resulted from allegations that the company “may have issued materially misleading business information to the investing public,” the firm wrote, adding that:
Rosen Law Firm is preparing a class action lawsuit to recover losses suffered by First Bitcoin investors.
This class action lawsuit applies to anyone who purchased BITCF shares on or before August 23, 2017.
Another law firm, Bronstein, Gewirtz & Grossman, has also announced that it is investigating potential claims on behalf of BITCF purchasers. “The investigation concerns whether First Bitcoin and certain of its officers and/or directors have violated Sections 10(b) and 20(a) of the Securities Exchange Act of 1934,” the firm wrote.
By press time, a third law firm which specializes in national securities laws, Faruqi & Faruqi, also announced its investigation into potential claims against First Bitcoin Capital Corp. “As a result of the suspension of the company’s securities, shares of First Bitcoin Capital are illiquid,” the firm stated.
What do you think of the SEC’s action and the subsequent lawsuits? Let us know in the comments section below.
Images courtesy of Shutterstock, SEC, and First Bitcoin Capital Corp
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Source: News Bitcoin