The U.S. Securities and Exchange Commission has issued a subpoena to controversial Riot Blockchain, a company that has been in the news more often than it would wish. The Castle Rock, Colorado-based company made the disclosure in its annual report in which it listed internet retailer Overstock as one of its biggest competitors. The subpoena was not a big surprise to many, given the SEC’s promise early this year that it would investigate companies that had switched to crypto-related activities in recent times to take advantage of the heightened investor interest in the industry.

Riot To Fully Cooperate With SEC

Riot Blockchain received the subpoena on April 9, with the SEC requesting certain information which the report didn’t disclose.

On April 9, 2018, the Company received a subpoena from the SEC requesting certain information from the Company.  The Company intends to fully cooperate with the SEC request.  The Company has notified its insurance carrier although there can be no assurance that the costs of compliance with the subpoena or any related matters will be eligible for insurance coverage.  Nevertheless, response to the subpoena will entail cost and management’s attention.

The company also stated that it believes many other companies involved in blockchain and cryptocurrency have received subpoenas from the SEC as well, which presents an additional industry risk. It also recognizes the adverse effects a targeted investigation into the company could bring to its operations.

Riot Blockchain’s report went on to state some of the cryptocurrency-related risks that they face, the first being regulatory changes which could restrict the use of cryptocurrencies in a way that affects their operations. The company’s change in name and business strategy last year also subjects them to increased scrutiny from the SEC which could interfere with the day-to-day operations of the company. The banking sector may also withhold their services and facilities from the company, now that it deals with cryptocurrencies.

The Journey So Far

Riot Blockchain was previously known as Bioptix before it changed its name and operations in late 2017. Bioptix was a veterinary and life science-oriented business that conducted both diagnostics and research. With the change of name to Riot Blockchain, the company shifted its focus to blockchain and cryptocurrency-related business. Initially, Riot invested in companies in the sector, but later started Bitcoin mining. The change in business operations came at a time when the crypto market was soaring, and this saw their shares spike by over 1,500% to around $40.

The company also disclosed that it is not yet profitable and that it has been incurring losses since its inception.

We are not profitable and have incurred losses since our inception.  We expect to continue to incur losses for the foreseeable future, and these losses could increase as we continue to work to develop our business.

While the firm remains optimistic that its mining center in Oklahoma will become profitable in the future, it admits that this profitability may not be sustainable in the long run.

Three weeks ago, Riot Blockchain acquired 92.5 percent of Logical Brokerage Corp, a Miami-based registered futures brokerage. With the acquisition, Riot Blockchain disclosed its plan to launch a cryptocurrency exchange and a futures brokerage operation in the United States.