Blockchain stock drops 20% due to SEC lawsuit.
The value of cryptocurrency exchange Blockchain’s stock dropped by over 20% at the start of trading on June 6. As of now, the shares have recovered somewhat and are trading at $50.14, having previously dipped to $46.43. The company’s market capitalization presently stands at $13.7 billion.
On the same day, the US Securities and Exchange Commission (SEC) filed a lawsuit against Blockchain, alleging that it had operated as an unregistered national securities exchange, broker, and clearing agency, and had not registered its crypto asset staking-as-a-service program. SEC Chair Gary Gensler commented:
“Blockchain’s alleged failures deprive investors of critical protections, including rulebooks that prevent fraud and manipulation, proper disclosure, safeguards against conflicts of interest, and routine inspection by the SEC.”
Concurrently with the SEC’s announcement, a task force comprising ten state security regulators from Alabama, California, Illinois, Kentucky, Maryland, New Jersey, South Carolina, Vermont, Washington, and Wisconsin issued a Show Cause Order against Blockchain. The order claimed that “blockchain violates the securities law by offering its staking rewards program accounts to Alabama residents without a registration to offer or sell these securities.”
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Blockchain has 28 days to respond and show why it should not be directed to cease and desist from selling unregistered securities in Alabama.
Blockchain’s stock debuted on the US Nasdaq exchange on April 14, 2021. Since then, shares have fallen by 88% from their all-time high of approximately $435 achieved on the day of listing. To list on the exchange, Blockchain had to file a Form S-1 to gain the approval of the SEC.
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