The CEO and chairman of Riot BlockChain has resigned in the wake of unrelated charges by the U.S. Securities and Exchange Commission (SEC) against him for alleged fraud in connection with other companies.
John O’Rourke who has been the company’s CEO since November 3, has been replaced by Chris Ensey and the new chairman of the board is Remo Mancini, the company said in a new release issued Saturday.
The release did not specify a reason for the resignation, but Riot was not part of the SEC complaint. O’Rourke did not immediately respond to CNBC’s request for comment.
Barry Honig, a Florida investor who was once Riot’s largest shareholder, was also named in the SEC complaint.
The SEC announced on Friday charges against a group of 10 individuals and their associated entities for long-running fraudulent schemes that brought in more than $27 million.
The SEC called those charged “microcap fraudsters” in a press release.
“Honig was the primary strategist, calling upon other Defendants to buy or sell stock, arrange for the issuance of shares, negotiate transactions, or engage in promotional activity,” according to the SEC complaint.
“In each scheme, Honig orchestrated his and his associates’ acquisition of a large quantity of the issuer’s stock at steep discounts, either by acquiring a shell and executing a reverse merger or by participating in financings on terms highly unfavorable to the company,” it added.
The SEC brought the action for “three highly profitable ‘pump-and-dump’ schemes perpetrated by Honig, [John] Stetson, [Michael] Brauser, O’Rourke, [Mark] Groussman, and [Phillip] Frost, and their entities,” the complaint alleged. Frost is a well-known biotech investor and founded Opko Health.
CNBC reached out to all those named in the complaint, but Groussman declined to comment while the other defendants were not immediately available. The SEC also alleges the defendants arranged and paid for stock promotion.
“Honig then directed O’Rourke to write a promotional article, which O’Rourke published under the pseudonym ‘Wall Street Advisors’ on Seeking Alpha,” the complaint said. “[O’Rourke] also knowingly and falsely claimed ‘not receiving compensation'” for writing the article.
In another instance cited by the SEC, John Ford, also a defendant, allegedly failed to disclose in an article promoting a stock that he had been compensated by Honig for writing the article, with Honig selling him below-market shares.
Riot Blockchain is a cryptocurrency company whose stock price skyrocketed after it changed its name.
Riot’s stock was down more than 24 percent in after-market trading on the news.