Billionaire Phillip Frost Keen To Put Riot Blockchain SEC Allegations Behind Him, Settles The Crypto Case

Billionaire Phillip Frost Keen To Put SEC Allegations Behind Him: Settles Crypto Case

The problem with truth is that it is usually gray. While the US Securities and Exchange Commission (SEC) has rightly been criticized for being too rigid, the other side is that the hawkish approach stems from the many potentially illegal schemes that have infiltrated the crypto verse. This is what seems to have happened in their pursuit again Biotech magnet Phillip Frost and his firm Riot Blockchain.

About three months ago, Mr. Frost, was amongst almost a dozen others who were indicted by the American regulatory body. Along with specific individuals various associated subsidiary companies were charged with knowingly participating in a pump-and-dump scheme. Last week, the octogenarian confirmed he had reached an agreeable way to settle the civil complaint.

Interestingly the billionaire cleverly stayed away from accepting or denying the charges of stock fraud. In any case, the deal is awaiting approval from the court. Reportedly, Frost has consented to pay a fine of $5.5 million as well as bear a partial ban on trading. In addition to this the company where he is the CEO, OPKO Health, will also shell out an extra $100,000 as a penalty.

What Was The Case

In late 2017, around the time blockchain was getting prominence, Bioptix, a penny stock, was repurposed as a blockchain firm, Riot Blockchain. By late October this new companies stocks had shot up, with almost all gains after its change in focus. This is what drew the attention of the SEC when it was noticed that the prices that were hovering around the $5 mark were now nearly $50. This 900 percent price jump, it is alleged, was due to the engineering of Mr. Frost and his co-conspirators.

To further strengthen their case the SEC looked into the financial health of Riot. As per the last few financial reports, it is clear the company is not well off, with revenues around the $1 million mark. This becomes starker when one notes the consistent losses around $20 million posted during the same time.

Looking to quickly put this episode behind him Frost stated,

“We have reached an agreement with the SEC that will end a potentially expensive, contentious and time-consuming litigation and I am happy that we can focus on an exciting and productive 2019 for OPKO Health.”

SEC Keeping Its Word

Jay Clayton, the head of the SEC, has been time and again accused of a witch hunt, in the way his organization has been perceived to be dealing with crypto assets. Repeatedly denying permits and making it as hard as possible for cryptos, the SEC chief has none the less denied any agenda. He has often stated that he simply wants this new industry to thrive and wants to do everything for the blockchain inspired businesses to be safe, sans the “bad apples”.

In this crusade, the US watchdog has denied many requests for permissions to setup crypto related businesses and exchanges. It has also taken a dim view of Initial Coin Offerings, even going as far as to temporarily halt trading of CIAO Group shares, citing that concern.

While the ability to trade and set up businesses is the foundation of a capitalist economy, tempering it with a little stringent application of the law, might just be the bitter medicine that this nascent industry needs.