The path that QMMM Holdings (QMMM) took on its way toward pivoting into cryptocurrencies has become a familiar one.
The digital advertising media company, which is incorporated in the Cayman Islands and based in Hong Kong, revealed in February that it had received a letter from Nasdaq informing it that it was facing delisting from the index because its share price had fallen below the minimum $1 bid needed to maintain compliance.
As per its policy, Nasdaq gave the company 180 calendar days – or until August 25 – to get its share price back into compliance.
Although QMMM never updated its status with Nasdaq, the company’s stock closed the trading day on August 25 priced at $4.59, which put it back in compliance.
And then in September, QMMM said that it was pivoting to crypto, announcing that it was launching a digital asset treasury focused on buying bitcoin, Ethereum and Solana. The company projected the treasury to initially reach $100 million in assets.
CEO Ben Kwai said in a statement at the time that the company was aiming “to position QMMM at the forefront of the Web3 transformation,” while also integrating AI-driven analytics into its business.
“Our cryptocurrency initiatives, combined with our expertise in AI and digital platforms, are designed to create sustainable value for our stakeholders while reinforcing our role as a forward-looking technology company,” Kwai said.
Like it has happened for many companies that pivot to crypto, the launch of its new treasury sent shares of QMMM soaring.
In fact, its stock surged 1,700% the day it announced the crypto treasury on September 9, sending its price from $11 to an all-time high of $207 in a single day.
The company’s stock has gained 9,228% for the year.
Regulators flag aggressive trading volumes
But this meteoric rise caught the eye of the U.S. Securities and Exchange Commission (SEC), which said on Friday that it had suspended trading of QMMM’s stock. It is a temporary suspension that will end on October 10.
The SEC said that it had halted trading of QMMM’s stock because “of potential manipulation in the securities of QMMM effectuated through recommendations, made to investors by unknown persons via social media to purchase the securities of QMMM, which appear to be designed to artificially inflate the price and volume of the securities of QMMM.”
QMMM has not commented on the suspension.
The Wall Street Journal reported last week that the SEC and the Financial Industry Regulatory Authority (FINRA) have reached out to nearly 200 companies that have announced the launch of crypto treasury strategies this year, raising concerns about “unusually high trading volumes and sharp stock-price gains in the days leading up to the companies’ announcements.”
According to the Journal, the SEC warned these companies about possible violations of Regulation Fair Disclosure (Reg FD), which is a rule that bans public companies from disclosing any “material, nonpublic information” that can be traded on by investors and other market participants.
However, Carl Capolingua, senior editor at the market analysis platform Market Index, told Cointelegraph that the issue the regulators are flagging with QMMM is likely not directly related to its crypto treasury strategy, but rather “illegal stock promotion is the main issue here.”
There are now 196 public companies that have launched crypto treasuries, according to data from BitcoinTreasuries.net.
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