Riot Blockchain Names New CEO, Chairman after SEC Fraud Charges for Former Boss

John O'Rourke has stepped down as CEO and chairman of US-based Riot Blockchain after being charged by the US Securities and Exchange Commission (SEC) with fraud. O’Rourke, who acted as CEO for about ten months, has been replaced in that role on an interim basis by Chris Ensey, while Remo Mancini has been named chairman of the board.

On Friday, the SEC charged a group of 10 people and their associated firms and organizations with taking part in fraudulent schemes that generated a total of $27 million. The “microcap fraudsters” illegally sold company shares, which left many retail investors with worthless stock, the regulator said in its press release. Among the individuals charged are O'Rourke and Barry Honig, a Florida-based investor who was previously Riot’s largest shareholder. However, the fraudulent schemes he managed have nothing to do with this company.

Honig was the primary strategist in at least three such pump-and-dump schemes. He allegedly ran the acquisition of a large number of shares in three companies at generous discounts. After obtaining a significant ownership interest, Honig and his group carried out an illegal and manipulative promotional campaign to boost the price and simulate an active trading volume. The SEC suspects the group then dumped their stock, leaving retail investors with millions of dollars in losses.

Sanjay Wadhwa of the SEC’s Division of Enforcement commented:

“As alleged, Honig and his associates engaged in brazen market manipulation that advanced their financial interests while fleecing innocent investors and undermining the integrity of our securities markets.” “They failed to appreciate, however, the SEC’s resolve to relentlessly pursue and punish participants in microcap fraud schemes,” he added.

O'Rourke resigned in the wake of the accusations, and Riot Blockchain announced a restructuring at the top but without specifying the reasons for O'Rourke’s resignation. Even though Riot was not mentioned in the SEC’s complaint, the company saw its stock price slump by over 24% in Friday after-market trading.

Riot Blockchain is a former biotech company that rebranded in 2017 by adopting its current name to better reflect its new blockchain-focused strategies.