Regulators crack down on companies seeing spike over crypto announcements
Crypto treasury firms have been on the rise lately, attracting both investor attention as well as regulatory scrutiny.
While adoption may be growing, not every rally is being welcomed.
The SEC has been cracking down on companies experiencing sudden stock surges, especially around crypto announcements. QMMM Holdings Ltd, a digital advertising and marketing production service company, is the latest to face a trading halt after its shares shot up dramatically.
According to a report from Bloomberg, the U.S. SEC has suspended trading in QMMM after the stock shot up nearly 1,000% in less than three weeks.
The regulator said the rally may have been fueled by anonymous social media posts urging people to buy the stock. Trading has been halted but is expected to resume at 11:59 p.m. ET on October 10.
Earlier this month, QMMM had revealed plans to build a $100 million diversified crypto treasury, with investments in Bitcoin, Ethereum, and Solana.
The announcement sent shares skyrocketing from $11 to over $200.
The company had also outlined its strategic shift into the crypto space, using blockchain and artificial intelligence.
While the move highlighted its push into digital assets, the suspension is a reminder that regulators are on alert for hype-driven rallies that lack strong fundamentals.
QMM is not the only case. The SEC and FINRA have been tightening oversight of companies that make sudden pivots into crypto.
Critics note that companies adopt these strategies mainly to boost their stock prices. Due to these concerns, regulators are now tightening the rules.
Regulators have reached out to around 200 companies that announced crypto treasury strategies this year following suspicious trading spikes.
Nasdaq also now requires certain crypto treasury companies to get shareholder approval before issuing new stock to fund their crypto holdings. Companies that don’t follow the rules could even be delisted.
Despite this increased scrutiny, corporate adoption of digital assets is growing rapidly. Bloomberg reported earlier this month that 184 publicly traded companies have announced plans to raise over $132 billion for crypto investments.
Public companies now hold over 1 million Bitcoin, and many are expanding into altcoins like BNB, Ethereum, and Solana. Tom Lee’s BitMine Immersion, for example, is repeatedly making headlines for holding over $10 billion in ETH.
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