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This morning the SEC suspended trading in shares of First Bitcoin Capital.

If you are not familiar, First Bitcoin Capital is a penny stock with a $541 million dollar market cap traded on the OTC market place.

Ah yes, the good ol OTC penny stock market place.

I remember it fondly, well actually not that fondly as the majority of the companies listed on there never amount to more than share selling schemes intended to enrich the insiders with little hopes of actually growing a business and creating wealth for their share holders.

That being said, let me also counter that with saying there are indeed some real legitimate businesses on there that aren't able to list on larger exchanges for whatever reasons, with the majority of those being foreign companies.

Why did the SEC step in today?

The SEC said that they are moving to suspend trading because of concerns over the information published by First Bitcoin Capital (BITCF), specifically the value of the assets BITCF claims to own.

The actual notice form the SEC reads as follows:

"The Commission temporarily suspended trading in the securities of BITCF 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. This order was entered pursuant to Section 12(k) of the Exchange Act."

The suspension is set to last until at least September 7th.

That would make it a two week suspension, pretty standard practice for these kind of things.

What does this mean for BITCF?

This is pretty much the death blow to BITCF and it's stock price.

A suspension doesn't sound all that bad on the surface but in reality it pretty much just killed the stock.

When it reopens for trading it will open roughly 80-90% lower than where it was today ($1.79), and then it will go down from there.

It will most likely be delisted from the OTC exchange and move down to the Grey Sheets.

The Grey Sheets market is where stocks go to die. There is no liquidity and no investors. A stock graveyard if you will.

Innocent until proven guilty?

No, not really.

These guys are guilty.

The SEC doesn't suspend trading in a stock until they have found evidence of wrong doing. They don't suspend trading just to do an investigation.

If they are suspending trading in the stock, it means they have already found evidence of wrong doing.

They don't have the resources to do it any other way.

Unfortunately, I have seen this all too often.

Any time there is some asset that is doing very well price wise, penny stocks shoot up all over the place claiming to have large amounts of said asset.

You see it when gold prices shoot up, or when lithium prices soared, or the price of oil, and now Bitcoin prices...

Most of them have charts that look something like this:

https://s27.postimg.org/vu4ws6n83/Screenshot_34.png

Worthless, until moon shot.

Basically these people are most likely scammers looking to make a quick buck off of the attention being placed on the real asset.

Sort of a "popular by association" type of thing.

I feel for anyone that got duped into buying this stock hoping to catch a ride with Bitcoin's climb.

Remember, if want to invest in Bitcoin, the best thing you can do is actually buy one on an exchange and then store it in an offline wallet.

Stay safe and stay informed my friends.

Sources:

https://www.coindesk.com/sec-suspends-trading-publicly-listed-bitcoin-firm/

Image Sources:

https://iowaworkcomplaw.com/tag/fraud/

https://finance.yahoo.com/quote/BITCF/

Follow me: @jrcornel