NEW YORK (Reuters) – Riot Blockchain Inc, a onetime biotechnology firm that saw its share price skyrocket when it refocused on cryptocurrencies, named a new chief executive after the company’s previous boss was accused of involvement in securities fraud.
The company said in a statement that its chief operating officer, Chris Ensey, would take over the company after the Securities and Exchange Commission on Friday named former CEO John O’Rourke as one of several people involved in a long-running microcap “pump-and-dump” scheme.
The SEC said the plot involved manipulating the share price of stocks in three unidentified companies, generating over $27 million from unlawful sales and leaving retail investors with “virtually worthless stock.”
The SEC also named Barry Honig, a former major Riot shareholder, among the individuals involved in the scheme, saying Honig engaged in manipulative activity after taking ownership interests in the companies. Lawyers for Honig and O’Rourke did not respond to requests for comment.
Riot Blockchain was not accused of wrongdoing. Shares in the company fell 24 percent on Friday. The company did not immediately respond to a request for comment.
O’Rourke resigned as CEO and chairman and was replaced by Riot’s current lead director, Remo Mancini, in the chairman’s role, according to the statement.