The US Securities and Exchange Commission (SEC) has temporarily suspended trading of QMMM Holdings, citing concerns over potential stock manipulation linked to the firm’s recent pivot into cryptocurrency holdings.
Key Takeaways:
- The SEC has suspended trading of QMMM Holdings over concerns of stock manipulation tied to its crypto pivot.
- QMMM’s share price surged nearly 1,800% following announcements of crypto holdings and a $100M-backed platform.
- Regulators are expanding probes into firms using crypto treasury strategies amid growing fears of hype-driven market abuse.
The trading halt, which took effect Monday, is set to last 10 trading days.
In its notice, the SEC said QMMM stock was potentially manipulated through “recommendations made to investors by unknown persons via social media,” allegedly aimed at inflating both the share price and trading volume.
QMMM Soars Nearly 1,800% in a Day Following $100M Crypto Platform Reveal
Shares of QMMM Holdings had surged more than 1,700% in the past month after the company disclosed on September 9 that it would begin purchasing and holding Bitcoin, Ethereum, and Solana as part of a broader crypto treasury strategy.
The stock soared from $11 to an all-time high of $207 in a single day following a related announcement to launch a crypto analytics platform backed by $100 million in crypto assets.
QMMM last traded at $119.40 on Friday, up from roughly $6.50 a month earlier.
The suspension arrives just days after a Wall Street Journal report revealed that the SEC and the Financial Industry Regulatory Authority (FINRA) had begun probing several companies over similar crypto-linked stock surges.
The inquiry is focused on whether select firms or individuals engaged in stock promotion campaigns or improperly shared nonpublic information to benefit from rapid price movements.
Crypto treasury moves have exploded in popularity, with more than 200 companies announcing plans to hold digital assets in recent months.
While such strategies often spark stock rallies, analysts warn the trend is becoming overcrowded and risky, especially if falling crypto prices wipe out balance sheet gains.
Crypto Treasury Craze Unravels as Firms Turn to Debt-Fueled Buybacks
The crypto treasury strategy that gained traction among small-cap firms in 2024 is beginning to unravel, with several companies now launching debt-funded share buybacks to counter plunging stock prices.
At least seven firms, including those in gaming, biotech, and EV sectors, are now trading below the value of their crypto holdings, raising red flags among investors and analysts.
Critics say the tactic signals desperation and a departure from the original idea that crypto appreciation alone would drive shareholder value.
Notable cases include ETHZilla (formerly 180 Life Sciences), which saw its stock drop 76% despite accumulating ether and rebranding.
The company recently secured $80 million in debt to finance a $250 million buyback. Meanwhile, Empery Digital (formerly Volcon) holds $476 million in BTC but has a market cap of just $378 million, prompting it to expand its debt facility for similar repurchases.
A recent report from K33 Research reveals that 25% of public companies holding Bitcoin now trade at market values below the worth of their BTC holdings, highlighting a sharp drop in investor confidence.
The growing discount, known as the NAV gap, is limiting firms’ ability to raise capital, particularly hurting smaller players like NAKA, which has seen a 96% collapse in its market value.
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