Two of the blockchain hype bubble’s flagship companies now find themselves with new captains at their respective helms, after their CEOs stepped down days after being charged by US regulators with perpetrating a $27 million penny stock scam.
John O’Rourke, who until this week led biotech-turned-cryptocurrency company Riot Blockchain, and Robert Ladd, the CEO of MGT Capital, were named as defendants in a Securities and Exchange Commission (SEC) complaint alleging that they and others orchestrated three “pump-and-dump” schemes to defraud investors. Neither Riot Blockchain nor MGT Capital was named in the complaint.
According to the SEC, O’Rourke, Ladd, and eight others — including 81-year-old pharmaceutical billionaire Phillip Frost — conspired to generate more than $27 million in unlawful stock sales by artificially driving up the prices of penny stocks and then selling these nearly-worthless shares at significant profit. The “primary strategist” behind these schemes was an investor named Barry Honig.