This sounds awful lot like a similar company I hold.
SEC halts First Bitcoin Capital
2017-08-24 18:24 MT - Street Wire
Also Street Wire (U-BITCF) First Bitcoin Capital Corp
by Mike Caswell
The U.S. Securities and Exchange Commission has halted First Bitcoin Capital Corp., a Vancouver OTC Link listing that recently had a market capitalization of nearly $1-billion. (All figures are in U.S. dollars.) The SEC says that there are questions about the accuracy and adequacy of information about the company. The halt lasts for 10 business days.
The halt comes after First Bitcoin went to a $3.15 high on Aug. 14, 2017, up from a 41-cent low just four days earlier. The stock had substantial volume (over 13 million shares on two days) as it went to that high. There was no news to account for the rise.
The halt is contained in an order the SEC issued on the morning of Thursday, Aug. 24. It states that the SEC has concerns about the "accuracy and adequacy of publicly available information about the company including, among other things, the value of BITCF's assets and its capital structure." A halt is necessary for the protection of investors, the order states.
The SEC has little else to say. First Bitcoin's financial statements, however, show that it is difficult to justify the stock's $3.15 high (which gave it a market cap of $960.7-million). For the quarter ended June 30, 2017, the company reported total assets of just $673,593, most of which came in the categories crypto currencies and digital cash. The company claims to be in the business of creating or managing such currencies.
In halting the stock, the SEC also undoubtedly looked at First Bitcoin's most recent news release, which is far from ordinary. In that release, dated Aug. 2, the company said that it would be paying a dividend, of sorts. It claimed that it would pay the dividend using something called a TeslaCoilCoin. (A TeslaCoilCoin is one of the many virtual currencies in existence. It is named for Nikola Tesla, the Serbian-American inventor.)
First Bitcoin claimed to have 20 million of these TeslaCoilCoins, which it said were worth 54 cents each. Assuming this were correct, the dividend would have amounted to $10.8-million, or the equivalent of about four cents per share. The "historic dividend" was to be paid on Sept. 29, 2017. With the SEC's halt, it is not clear if the "dividend" will go ahead.
In another part of the halt order the SEC described First Bitcoin as a Vancouver company. It did so despite the fact that the company's chief executive officer, Greg Rubin, is a California dentist. Other members of its management look to have ties to Israel. There is, however, one clear Vancouver connection. The company's address is on Pender Street in downtown Vancouver. In fact, the address is that of Presidents Corporate Group Inc., a private entity that describes itself as a merchant banking firm.
It is not clear how Presidents Corporate Group is related to First Bitcoin, beyond having the same address. The firm is not without some controversy of its own though. Its sole director is Erwin Liem, who made headlines in 2007 when provincial prosecutors brought fraud charges against him. They said that he fraudulently obtained shares of Global Cogenix Industrial Corp., a former Vancouver Stock Exchange listing for which he had served as a director. Prosecutors claimed that he received shares in private placements without paying for those shares. Mr. Liem pleaded guilty, and received a nine-month conditional sentence, which means that he did not go to jail.
(Mr. Liem also had a co-defendant in that case, a former RCMP commercial crime officer named Edward Gallagher. He retired from the RCMP in 1984 and had been the president of Global Cogenix. The charges against him were fraud, theft and forgery. He pleaded guilty, and received a 12-month sentence.)
For First Bitcoin, the SEC's halt likely means that it will only trade in the grey market. Unlike halts in Canada, those issued by the SEC place an onerous burden on brokers wishing to trade the stock even after it resumes. They must keep up-to-date information on the company's financial status and on its insiders. They must also have copies of the company's prospectus, its most recent annual report and any subsequent quarterly reports. In addition, brokers must maintain current information on the company's name, address, state of incorporation, number of shares outstanding, the name of its transfer agent and the nature of its products. Brokers must also know if a price quotation is from another broker or from an insider. They must provide this information to anyone interested in trading the company.
The halt will last for 10 business days, or until Sept. 7, 2017. Prior to the halt, First Bitcoin was last at $1.79.
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