SEC: ‘Primary strategist’ in $27 million ‘lucrative market manipulation’ case plans to settle

Florida businessman Barry Honig plans to settle charges brought by the Securities and Exchange Commission, the SEC said, in what it called “classic pump-and-dump schemes” when the charges were announced. The SEC filed a motion on Friday afternoon requesting an extension of time.

“This week, Defendant Honig and the Commission staff reached an agreement in principle to settle the Commission’s claims for liability,” the motion said.

Honig’s company GRQ was also charged and is included in the proposed settlement. The extension of time was requested to allow the SEC to obtain “approval of a settlement in principle,” according to the latest filing.

No other details about the potential settlement were given.

The SEC charged 19 others along with Honig. The SEC already settled in full or in part with nine defendants, including Miami biotech billionaire Phillip Frost, according to the filing.

“Honig was the primary strategist, calling upon other Defendants to, among other things, acquire or sell stock, arrange for the issuance of shares, negotiate transactions, and/or engage in promotional activity” in the $27 million schemes, according to the SEC’s amended complaint, filed in March.

The SEC declined to comment beyond its latest motion.

Eli Richlin, one of the attorneys for Honig, said he had no comment when reached by phone.

Honig was once the largest shareholder of Riot Blockchain, the cryptocurrency company whose stock skyrocketed after it changed its name from Bioptix. He was charged by the SEC along with John O’Rourke, the former CEO of Riot Blockchain, who left Riot in the wake of the charges.

The SEC case is unrelated to Riot Blockchain.

O’Rourke remains a defendant in the case and takes no position on the extension of time, according to the SEC’s motion.

Attorneys for O’Rourke did not immediately return CNBC’s request for comment.

A CNBC investigation in February 2018 found a number of red flags at Riot Blockchain, including annual meetings that were postponed at the last minute, sales of stock by company insiders soon after the company’s name change, dilutive share issuances on favorable terms to large investors, confusing SEC filings and evidence that a major shareholder was selling shares while everyone else was buying.

“We have made significant inroads in building a diversified portfolio of investments and to begin securing digital assets,” O’Rourke said in a letter to shareholders the day the CNBC investigation aired.

As bitcoin’s price hit record highs in late December 2017, Riot was making news on a daily basis. The company’s stock shot from $8 a share to more than $40 as investors chased the craze of all things crypto.