Adding the word "blockchain" to its name turned out to be a very profitable practice for many companies traded on stock exchanges last year. As it turned out, this medal has the opposite side. Bitcoin. com reports about it.
A class-action lawsuit against Riot Blockchain,Inc. (NASDAQ: RIOT) filed by investors from Florida. They argue that the company, its management and one of the largest shareholders violated the requirements of the Securities Exchange Act of 1934.
Until October 2017, the company was named Bioptix, Inc. and specialized in the development of diagnostic tools for veterinarians. On October 4, Bioptix announced that it will be called Riot Blockchain and will be engaged in investing in blockchain. The plaintiffs assume that the company disseminated false information and did not conduct real activities, while the prices of its shares continued to grow artificially.
In particular, Riot Blockchain did not say that it changes its name to attract investors and to link its company to the growth of the crypto market without having any significant presence on it and thus hoping to help Barry Honig, its main shareholder, later to sell his shares at artificially high prices.
Long Blockchain Corp. (NASDAQ: LBCC) in turn received a notice from Nasdaq, which says that the stock exchange decided to conduct delisting of the company's shares. Until June 2017 the company was called Long Island Iced Tea. The day after re-branding, its shares rose by 432%.
The company can appeal against Nasdaq's decision if it meets the requirements of the exchange, according to which the capitalization of its shares in the market should not fall below $ 35 million within 10 consecutive working days.