SEC suspends trading in Bitcoin Penny Stock
This morning the SEC suspended trading in shares of First Bitcoin Capital.
If you are not familiar, First Bitcoin Capital is a penny stock with a $541 million dollar market cap traded on the OTC market place.
Ah yes, the good ol OTC penny stock market place.
I remember it fondly, well actually not that fondly as the majority of the companies listed on there never amount to more than share selling schemes intended to enrich the insiders with little hopes of actually growing a business and creating wealth for their share holders.
That being said, let me also counter that with saying there are indeed some real legitimate businesses on there that aren't able to list on larger exchanges for whatever reasons, with the majority of those being foreign companies.
Why did the SEC step in today?
The SEC said that they are moving to suspend trading because of concerns over the information published by First Bitcoin Capital (BITCF), specifically the value of the assets BITCF claims to own.
The actual notice form the SEC reads as follows:
"The Commission temporarily suspended trading in the securities of BITCF because of concerns regarding the accuracy and adequacy of publicly available information about the company including, among other things, the value of BITCF's assets and its capital structure. This order was entered pursuant to Section 12(k) of the Exchange Act."
The suspension is set to last until at least September 7th.
That would make it a two week suspension, pretty standard practice for these kind of things.
What does this mean for BITCF?
This is pretty much the death blow to BITCF and it's stock price.
A suspension doesn't sound all that bad on the surface but in reality it pretty much just killed the stock.
When it reopens for trading it will open roughly 80-90% lower than where it was today ($1.79), and then it will go down from there.
It will most likely be delisted from the OTC exchange and move down to the Grey Sheets.
The Grey Sheets market is where stocks go to die. There is no liquidity and no investors. A stock graveyard if you will.
Innocent until proven guilty?
No, not really.
These guys are guilty.
The SEC doesn't suspend trading in a stock until they have found evidence of wrong doing. They don't suspend trading just to do an investigation.
If they are suspending trading in the stock, it means they have already found evidence of wrong doing.
They don't have the resources to do it any other way.
Unfortunately, I have seen this all too often.
Any time there is some asset that is doing very well price wise, penny stocks shoot up all over the place claiming to have large amounts of said asset.
You see it when gold prices shoot up, or when lithium prices soared, or the price of oil, and now Bitcoin prices...
Most of them have charts that look something like this:
Worthless, until moon shot.
Basically these people are most likely scammers looking to make a quick buck off of the attention being placed on the real asset.
Sort of a "popular by association" type of thing.
I feel for anyone that got duped into buying this stock hoping to catch a ride with Bitcoin's climb.
Remember, if want to invest in Bitcoin, the best thing you can do is actually buy one on an exchange and then store it in an offline wallet.
Stay safe and stay informed my friends.
Sources:
https://www.coindesk.com/sec-suspends-trading-publicly-listed-bitcoin-firm/
Image Sources:
https://iowaworkcomplaw.com/tag/fraud/
https://finance.yahoo.com/quote/BITCF/
Follow me: @jrcornel
The SEC cant stop this train
Forget the penny stocks and stocks! Buy the decentralized crypto currencies directly!
obviously the best answer
It is a real shame for people to buy stocks as a way of getting involved in bitcoin.. all it takes is a Coinbase account and a bank account and you can purchase your own bitcoins. It's not hard to do.
Slightly harder than using an existing equity account. So for the lazy, GBTC is an easy way to go, and particularly easy if you already your equity trading account up and running.
I didnt say GBTC was a smart way to go. Coinbase is much smarter. My only point is coinbase does have some start-up overhead which is a touch annoying, given how poor they are on customer service and attention to any questions you might have at sign-up
There are always gonna be scammers out there and unfortunately there are a lot of uniformed people too! Thanks for keeping us informed. I wonder if the SEC has gotten wind of Bitconnect! A lot of their citizens are getting sucked in and gonna be hurting when that house of cards falls - but I guess they don't have jurisdiction yet?!
I had GM stock - what a scam that was, and not its back on the stock market again - SEC is worthless
Now so many people say shit about Bitconnect like its a sure thing that its a scam - and what if its not ?
Yes, I agree, bankruptcy and too big to fail is another scam. I have looked into Bitconnect and there is no logical way that they can continue to make the payouts they are promising. But I believe they have a mechanism to control this by requiring investors to exchange everything into BCC tokens. When the money stops coming in and the momentum shifts they can flood the market with BCC they held back and devalue the tokens. Investors will only receive fractions of pennies on the dollar for the value of what they put into BCC. It's a game of musical chairs with a lot of people and very few chairs so if you are invested best to get out as soon as you can. By the way, if you think about it, "What if its not a scam?", is probably the worst endorsement of an investment you could ever make.
Bitconnect is a risk, but they can't just get out of the game like others, because they have their very own blockchain and "COIN", that can't just vanish like a simple HTML website.
You are right. This is a much more sophisticated operation with their own token but when redemptions start pouring in they can still block transactions and devalue BCC almost to zero. So the result will be the same and it will be dropped from all the exchanges. I think part of their marketing success has been allowing people to think it might be a scam but that they can beat the house. I never hear any of their promoters say that they ran the numbers and checked the technology and this is a solid investment. But it's definitely not worth the risk and even if you get out with some money there's always the risk of clawbacks from lawsuits.
If they do what they say they do then numbers will work and this is a business making great profits like Renaissance Technologies making profit 40% a year after expanses for years for their investors however still no evidence of all the things they say they have and do makes it kind of shady looking
WOW, before you send any BTC to these dudes, can I offer you a better deal? If you send me your BTCs, I'll promise you a 580% return per year, which is 100% better than what the BCC grifters are promising.
Let me know if you want my BTC address.
sure and you have people who can prove you did it for them as well and you pay them daily interest of 1.6% for at least one year looking back
then send me your BTC address
Upvoted!!
Who would buy this crap anyways? Why not just buy some btc at the hundreds of ATMs that already exist all over the country? the USA has the most BTMs (Bitcoin ATMs) in the world.
Probably people who don't know how to buy Bitcoin and already have an equity account. They see this is a way to catch some of the move in Bitcoin using traditional investment vehicles.
They could also buy the Silbert's GBTC, no?
You nailed it I threw $100 at it a month ago just to see if anything would happen and all of a sudden it quadrupled two weeks later, and I was like wtf; I checked the web site and SEC reports on there, the company had minimal assets and insane market cap, so I luckily got out a week ago.
ditto
It amazes me how some of these "companies" flit from one business to the next. Depleted gold mines, ostrich farms, Jatropha plantations - I've seen it all. Bitcoin is just the latest stock pumping vehicle.
Are you saying there is a chance for me to get back into Jatropha? Do tell? What do I buy? LOL
Another one you want to avoid is Bitconnect. It's a pyramid scheme. When it hits the fan, it's top promoters like Trevon James will be looking at jail time. Always stay familiar with the law, ponzi schemes before investing.
@jrcornel The sad part is that the traditional markets would be an amazing conduit for investors to get introduced to crypto. Once there have been fat returns on crypto-backed trusts/funds, and tepid ones on traditional stocks, there would be an exodus.
It could be for sure. The derivatives market is already coming to Bitcoin in a big way over the next couple months. There will be futures and options very soon.
Futures and options are for the more savvy investors. I am talking about "IRA Joe", who can put 2% in without risking the farm.
Btw, love the "Fommy" title in your description.
Haha are you also a Fommy?
Not a single dad, but I am quite domesticated. lol
Neither am I, I just say at home with our just turned 2 year old for the time being. :)
Enjoy it! People talk about the terrible twos, but 3 is harder than 2, and 4 is harder than 3! The more you get to know that big personality, the better off you are, period.
In the meantime, learn how to make French toast using legit french brioche bread. Pretty much Disneyland on a dinner plate, every time.
Oh good, so I have things to look forward to. Haha I will have to get that recipe a try, the Mrs. is a major French Toast fan!
The shame of it all there is always someone waiting to take your money whether it's legal or not these sods have no morals
Feed the government!
Or was I looking for a different f word?
Upvoted, resteemed
Haha I see what you did there. :)