B.Riley Investment Firm Under Investigation by SEC
An investment firm called B.Riley, which has supported various Bitcoin mining projects, is reportedly being investigated by the United States Securities and Exchange Commission (SEC), according to a recent report from Bloomberg.
Concerns Arise Over B.Riley’s Deals with Alleged Co-Conspirator
The report suggests that B.Riley played a role in brokering the acquisition of Franchise Group Inc. last year on behalf of Brian Kahn, who is implicated in the Prophecy Asset Management case. Some of Kahn’s assets were used as collateral for the deal, which was partially financed by Japanese financial group Nomura. The transaction was estimated to be worth $2.6 billion. Following this news, B.Riley’s stock dropped nearly 11%.
Hundreds of Millions Stolen from Prophecy Asset Management Clients
In November 2023, John Hughes, co-founder of Prophecy Asset Management, pleaded guilty to defrauding clients out of $294 million. Hughes named Kahn and Prophecy Asset Management CEO Jeffery Spotts as his co-conspirators. However, Kahn denies any knowledge or involvement in the fraud.
B.Riley Denies Involvement in Fraud
B.Riley maintains that it had no involvement or knowledge of the fraud scheme and distances itself from the actions of Prophecy Asset Management. The investment firm accuses short sellers of spreading false information for their own gain.
B.Riley’s Recent Deals
In March, B.Riley provided $70 million to Core Scientific during its Chapter 11 bankruptcy process. Additionally, the firm has entered into a deal with Iris Energy to potentially purchase up to $100 million worth of equity from the Australian Bitcoin miner.
SEC and Nomura Decline to Comment
Both the SEC and Nomura have declined to comment on the ongoing investigation.
Hot Take: B.Riley’s Reputation at Stake
B.Riley, a prominent investment firm in the cryptocurrency industry, is facing scrutiny as it becomes entangled in an SEC investigation. The allegations of involvement with an alleged co-conspirator have raised concerns about the firm’s business practices. The outcome of this probe could have significant implications for B.Riley’s reputation and investor confidence. As the investigation unfolds, it remains to be seen how B.Riley will navigate these challenges and whether it can rebuild trust within the crypto community.
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