SEC trading halt of crypto treasury firm QMMM is a TradFi issue

The US Securities and Exchange Commission has temporarily halted trading of crypto treasury company QMMM Holdings due to potential stock manipulation, coming just a week after reports surfaced of a regulatory probe into certain crypto treasury firms

“The Commission temporarily suspended trading in the securities of QMMM because of potential manipulation,” the agency said in a notice on Monday, halting trading of QMMM stock for 10 trading days.

It said the alleged manipulation was “effectuated through recommendations, made to investors by unknown persons via social media to purchase” QMMM shares, “which appear to be designed to artificially inflate the price and volume.”

QMMM Holdings shares are up over 1,700% in the past month after announcing on Sept. 9 that it would buy and hold Bitcoin (BTC), Ether (ETH) and Solana (SOL), joining dozens of companies that have recently made similar moves in the hopes of boosting their shares.

The SEC and QMMM Holdings did not immediately respond to a request for comment.

Crypto strategy unrelated to trading halt

Carl Capolingua, senior editor at the market analysis platform Market Index, told Cointelegraph that such SEC trading suspensions are “very rare, generally because of the consequences for company management.”

“If the SEC can link those ‘unknown persons’ responsible for promoting buying the company’s stock back to employees, or worse, to management, then the penalties can be severe, including large fines or jail time,” he added.

Capolingua said while QMMM’s crypto pivot may have made the business more attractive to some investors, its crypto strategy “isn’t likely to be an item of scrutiny” for the SEC as the alleged “illegal stock promotion is the main issue here.”

IG Australia analyst Tony Sycamore told Cointelegraph that if investors want crypto exposure, “these types of Hail Mary plays are not the way to go about it.”

QMMM gains over 1,700% before trading pause

Shares in QMMM Holdings (QMMM) closed trading on Friday at $119.40, having gained over 1,730% in the past month from around $6.50.

Shares in QMMM over the past month saw significant gains on the announcement of its crypto plans. Source: Google FinanceQMMM surged from $11 to an all-time high of $207 in a single day after announcing that it would build a crypto analytics platform and initially spend $100 million to stockpile cryptocurrencies.

SEC, FINRA reportedly probe crypto treasuries

The SEC’s trading hold on QMMM follows a report in The Wall Street Journal on Thursday that the regulator and the Financial Industry Regulatory Authority contacted some of the companies that launched a crypto treasury strategy.

Related: Crypto treasury mNAV metric ‘needs to be deleted’ — NYDIG

The SEC and FINRA had scrutinized unusually high trading volumes and price gains in some company stocks ahead of the public announcement of their crypto pivots, according to people familiar with the matter.

SEC rules dictate that companies cannot selectively disclose nonpublic information, as those in the know could use the information to unfairly gain or avoid losses ahead of a wider public disclosure.

Crypto treasury companies have become the hottest trend on Wall Street in recent months, with the Journal reporting that over 200 new companies have announced plans to buy and hold crypto.

Such announcements typically, but not always, boost the stock price of the company; however, some analysts are concerned that the market is overcrowded and could see multiple companies collapse if the value of their holdings exceeds their market value.

Magazine: How Ethereum treasury companies could spark ‘DeFi Summer 2.0’

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