Beware the hype machine.
John O’Rourke, former CEO of cryptocurrency company Riot Blockchain, and Robert Ladd, former CEO of MGT Capital, are among those charged in a Securities and Exchange Commission (SEC) complaint with orchestrating three “pump-and-dump” schemes to defraud investors.
According to the SEC, the two former CEOs and eight others including Barry Honig, a major investor in biotech company Bioptix, which became Riot Blockchain, conspired to generate more than $27 million in unlawful stock sales by artificially driving up the prices of penny stocks and then selling them at significant profit.
How’d they do it? They’d arrange and pay for the promotion of the stock, through “favorable and materially misleading articles” they’d write about the company whose stock price they wanted to boost, followed by “pre-release manipulative trading to generate a
misleading picture of market interest in the company’s stock, priming investor interest.” Read more here.