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Aug 24

First Bitcoin Capital Corp $BITCF receives SEC trading suspension

This morning just prior to the market open the SEC issued a trading suspension for First Bitcoin Capital Corp (BITCF), which has a market cap of $545 milliion as of the most recent close of $1.79.

SEC trading suspension release (PDF)
SEC trading suspension order (PDF)

The reason given for the trading suspension:

because of concerns regarding 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.

My bet is that the news from August 2nd of BITCF preparing to pay a dividend in an illiquid cryptocurrency (TeslaCoilCoin) was one of the primary reasons for the trading suspension. The record date for that dividend was to be September 12th which is why I think the SEC acted now. After first posting this article Jacob Ma-Weaver mentioned that BITCF had issued a cryptocurrency version of its own stock and he thought that was the reason for the suspension. I had missed this initially and now agree with Jacob. From the company’s recent PR about the dividend, “We may also from time to time pay dividends in our own common shares in their crypto form which trades under the crypto symbol $BITCF on various foreign cryptocurrency exchanges.”

BITCF will resume trading on the grey market (no market makers) at the open on September 8, 2017.

While I did not follow $BITCF closely, there were plenty of red flags. Besides the usual lack of assets ($673,000 including their cryptocurrency holdings), there was having Anthony M. Santos as legal counsel. I didn’t recognize his name at first but he was attorney for NevWest, a key broker that processed the illegal sales of billions of shares of stock in CMKM Diamonds.

Disclaimer. No position in any stocks mentioned and I have no relationship with anyone mentioned in this post. New information was added to this post later on the day it was first published to give more reasons why BITCF may have been suspended. This blog has a terms of use that is incorporated by reference into this post; you can find all my disclaimers and disclosures there as well.

 

9 comments

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  1. Speculari

    It’s possible predict?

    1. Michael Goode

      Never with any certainty, but some stocks are definitely a lot more likely to get suspended.

  2. Speculari

    Do you use analyzing SEC form for your trading now?

  3. AnneMarita

    One of the best webinars today since I joined Tim’s challenge. Thank you Michael. What comes to the SEC suspension of BITCF stock, I’m assuming that the post above has the ESSI ticker accidentally? I do have some questions related to the BITCF suspension, but if it’s ok, I’ll post in the chat room?

    1. Michael Goode

      Thanks for noticing that error. Yes, that was a typo and I have corrected it. BITCF as I said on the webinar will resume trading on September 8th at the open and there will be no market makers and no bid/ask. It will likely gap down 90%.

  4. John Mueller

    My guess was 0.40 and you are looking at 0.20
    The best course of action is to ASK ahead of the curve. I would ASK at 0.74 initially if I was holding, or less.

  5. David Skinner

    Yes, the gap will be at least 70% if not the 90% you mentioned. However, there is something very exciting about this SEC suspension. Really looking forward to see what’s going on here with BITCF in a couple weeks after the 8th. This grey sheet dead cat could turn into a roaring lion

  6. KG

    Michael,
    Thank you for the write-up on BITCF! I entered a short position the day it was suspended, and am trying to determine how I will cover my position in Interactive Brokers since, by everything I can find online, IB won’t let me place orders once a security is on the grey market. Can you provide insight on this?

    Thank you for all you do, see you in the chat.

    KG

    1. Michael Goode

      You will need to call IB and choose the backup trade desk (you will not be charged). I would recommend doing that right after the stock starts trading — they will call market makers for quotes and then you can choose to place an order or call back later.

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