The U.S. Securities and Exchange Commission halted trading on a high-flying technology company whose shares mysteriously gained 25,000 per cent over the past 17 days.
In a news release Friday, the SEC said shares in CYNK Technology Corp. – which trade over the counter – were suspended “because of concerns regarding the accuracy and adequacy of information in the marketplace and potentially manipulative transactions.”
The company’s sudden rise from a penny stock to a $6-billion valuation – the same as BlackBerry Ltd. – has captured the attention of regulators and the financial community for many reasons: it has only one employee, no revenue, no assets, no one seems to know what it does or whether it actually exists.
The Financial Industry Regulatory Authority, the largest independent securities regulator in the U.S., also suspended trading.
The bizarre tale of the mystery social networking site begins with its founding as Introbuzz by Las Vegas event promoter Kenneth Carter in May 2008.
The company was conceived as a social networking site that connects fans to their favourite celebrities. Its website, Introbiz.com contains images of celebrities like Johnny Depp, Angelina Jolie and Peter Dinklage, and offers their contact information for a fee that is typically $50.
SEC documents show 30 investors put money into the company totalling $54,300 as of August 2012. Mr. Carter later transferred his shares to Marlon Luis Sanchez, a southern California man who facilitates medical tourism for people seeking gastric bypass surgery in Tijuana, Mexico.
Mr. Sanchez, who owned 72 per cent of the shares, re-branded the company as CYNK, and according to SEC documents was also elected the company’s CEO, president, director, treasurer, and secretary in April 2013.
According to a legal document, Javier Romero took over Sanchez’s shares in 2014 and subsequently changed the headquarters of the company from Las Vegas to Belize City. After Mr. Romero took over, trading volume in the company promptly shot up. Shares in the company were only traded on three days in 2014 before June 17, but volume surged after that date, reaching a peak of 386,000 shares a day on the loosely regulated over the counter market. The stock went from $0.06 on June 16 to over $21 in intraday trading on Thursday. Its halted share price is $13.90.
Mystery in the company remains as high as its valuation. When the company that owns the Las Vegas address listed in CYNK’s SEC documents was contacted by the Globe and Mail, a representative said she had never heard of the company. The suite number that is listed for CYNK’s Belize address does not exist, the secretary of the building told Bloomberg. The phone number on CYNK’s SEC filing is also unassigned.
By the time trading had been halted CYNK had a market cap of $4-billion. Trading is suspended until 11:59 p.m. on July 24.
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