Phillip Frost Agrees to Settle Riot Blockchain Related Case for $5.5 Million

Riot Blockchain, Inc. replaced its CEO in September after the SEC charged him in connection with a fraudulent $27 million pump and dump scheme. Now another person involved in that case, biotech billionaire Phillip Frost, has agreed to pay $5.5 million to settle the charges.

Also Read: The Daily: Best Selling Authors Introduce Bitcoin to Followers

$5.5 Million Settlement

The Securities and Exchange Commission (SEC) charged a group of 10 individuals and 10 associated entities back in September for fraudulent schemes that generated over $27 million from unlawful stock sales and “caused significant harm to retail investors who were left holding virtually worthless stock.”

According to the SEC’s complaint, the group of “microcap fraudsters” was led by Barry Honig who was once the largest shareholder in Riot Blockchain, Inc. (NASDAQ:RIOT) and included John O’Rourke, its former CEO. From 2013 to 2018, the South Florida-based group manipulated the share price of the stock of three companies in pump-and-dump schemes, and Miami billionaire Phillip Frost allegedly participated in two of these.

On Thursday, Frost and his company OPKO Health, Inc. (NASDAQ: OPK) announced they have agreed to a settlement with the SEC to resolve the action brought against them, subject to court approval. Without admitting or denying the SEC’s allegations, OPKO agreed to a $100,000 penalty. Frost agreed, also without admitting or denying the SEC’s allegations, to approximately $5.5 million in penalties, disgorgement, and prejudgment interest. He also agreed to a prohibition from trading in penny stocks, with certain exceptions. Frost will continue to serve as OPKO’s CEO and Chairman.

“We have reached 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,” said Frost.

Riot Blockchain

Before October 2017, Riot was a biotechnology company known as Bioptix, Inc. that specialized in the development of veterinary diagnostic tools. On October 4, 2017 Bioptix announced it was changing its name to Riot Blockchain and shifting its business focus to investing in blockchain technologies.

In February 2018 Riot was hit with a class action lawsuit in the Southern District of Florida. The complaint alleged that the company failed to disclose that it had changed its name to Riot Blockchain in order to generate investor enthusiasm and tie the company to the then recent rise in the price of cryptocurrencies. This was done despite Riot’s lack of a significant blockchain business in order to further an insider scheme that would allow controlling shareholder Barry Honig and his associates to sell their Riot securities at artificially inflated prices.

Do you think the $5.5 million settlement imposed by the SEC was fair? Share your thoughts in the comments section below.

Images courtesy of Shutterstock.

Verify and track bitcoin cash transactions on our BCH Block Explorer, the best of its kind anywhere in the world. Also, keep up with your holdings, BCH and other coins, on our market charts at Satoshi’s Pulse, another original and free service from Bitcoin.com.