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US Court Dismisses Lawsuit Over Riot Blockchain's Crypto Pivot
A U.S. judge has dismissed a lawsuit alleging the firm changed its name to include "blockchain" in 2017 to boost its share price.
By Paddy Baker
Updated May 9, 2023, 3:08 a.m. Published May 4, 2020, 9:30 a.m.
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A New Jersey judge ruled last week that Riot Blockchain's decision to change its name was not, by itself, tantamount to securities fraud.
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Judge Freda Wolfson of the U.S. District Court of New Jersey dismissed a lawsuit Thursday that tried to argue the Colorado-based firm changed its name to "Riot Blockchain" in an effort to boost its share price.
Riot Blockchain changed its name from Bioptix in October 2017 after announcing a move from biotechnology into bitcoin mining. The share price soon rocketed from $8 to a high of $38 by December 2017. The original complaint – filed in February 2018 when the share price plunged to $10 – argued the company misled investors by capitalizing on public interest in blockchain to drive up the share price.
See also: Riot Blockchain Moves Part of Bitcoin Mining Operation to Upstate New York
But in Thursday's filing, complaints against Riot Blockchain, its CEO John O'Rourke, former CEO Michael Beeghley, and Chairman Jeffery G. McGonegal were dismissed on the basis that plaintiffs had not proven the company had changed its name to pump the share price.
Complaints against Riot Blockchain directors Andrew Kaplan, Jason Les, and Eric So; employees Catherine DeFrancesco, Mike Dai; and private investors Barry Honig, John Stetson and Martin Groussman for their alleged involvement were all dismissed Thursday as well.
The plaintiffs can file a request to produce an amended complaint within 30 days.
In February, the Securities and Exchange Commission (SEC) told Riot Blockchain it, too, was dropping its investigation into allegations of securities fraud.
On the same day the New Jersey suit was dismissed, Riot Blockchain announced the purchase of 1,000 of the latest S19 Bitmain mining rigs, for a reported $2.4 million.
See also: Riot Blockchain Plans Sale of Crypto Exchange as It Invests More Millions in Bitcoin Mining
The company did not return a request for comment by press time.
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