SEC Halts Trading in Crypto Co Over Possible Price Manipulation

It didn’t take long for the U.S. Securities and Exchange Commission (SEC) to spot shady behavior in the cryptocurrency market. The U.S. regulator has reportedly shut down trading in shares of The Crypto Co over concerns of price manipulation.

Crypto Co’s Stock Spikes

Trading in Crypto Co, a California-based cryptocurrency consultancy, have been suspended temporarily after share prices surged 2,700% in a month, raising red flags among the nation’s regulators. The suspension will continue until Jan. 3, according to the SEC, which issued a statement Tuesday on the matter.

Regulators expressed concerns about the “accuracy and adequacy of information in the marketplace about, among other things, the compensation paid for promotion of the company, and statements in Commission filings about the plans of the company’s insiders to sell their shares of The Crypto Company’s common stock.

The SEC also acknowledged that, “Questions have also arisen concerning potentially manipulative transactions in the company’s stock in November 2017.”

Prior to the suspension, Crypto Co’s share price was valued at $575 for a total market cap of $11 billion.

On Dec. 4, the company announced the launch of its cryptocurrency trading platform. The company was officially incorporated in March of this year before going public three months later.

According to Bloomberg, the company recently disclosed a private stock sale to accredited investors at just $7 per share, which is only a fraction of the closing price when the shares were suspended.

Regulatory Clampdown

Although clearly on the SEC’s radar, Crypto Co’s story is hardly unique in a market that has witnessed unprecedented gains over the past 12 months. The cryptocurrency market extends far beyond bitcoin to include more than $620 billion in virtual currencies and hundreds of initial coin offerings (ICOs) attracting billions of dollars in investment.

That being said, Crypto Co isn’t the first blockchain company to have its stock suspended by the SEC. Back in August, the regulator suspended trading in three stocks over concerns about the issuing companies’ ICOs. The SEC has been highly critical of tokens that operate like securities.

Prior to the SEC’s crackdown, market operator OTC Markets Group was also investigating Crypto Co. OTC Markets head Cromwell Coulson warned investors to exercise extra caution when selecting stocks in a highly volatile sector such as blockchain.

Disclaimer: The author owns bitcoin, Ethereum and other cryptocurrencies. He holds investment positions in the coins, but does not engage in short-term or day-trading.

Featured image courtesy of Shutterstock. 

Chief Editor to and Contributor to, Sam Bourgi has spent the past nine years focused on economics, markets and cryptocurrencies. His work has been featured in and cited by some of the world's leading newscasts, including Barron's, CBOE and Forbes. Avid crypto watchers and those with a libertarian persuasion can follow him on twitter at @hsbourgi