Crypto-Friendly Bank B. Riley Financial Under Investigation by U.S. Authorities
Crypto-friendly bank B. Riley Financial Inc. is reportedly facing an undisclosed investigation from U.S. authorities, specifically the Securities and Exchange Commission (SEC), according to sources familiar with the matter.
Investigation Linked to Securities Fraud Case
The investigation is said to be linked to Brian Kahn, an unnamed co-conspirator in a criminal case related to the collapse of the Prophecy Asset Management hedge fund in 2020. The SEC is reportedly looking into B. Riley’s transactions with a client associated with securities fraud.
Interviews Conducted by SEC Officials
SEC officials have conducted interviews in recent months to investigate Kahn’s involvement in the buyout of Franchise Group Inc., a deal facilitated by B. Riley and partly financed by Nomura Holdings Inc.
B. Riley’s Role in the Crypto Market
B. Riley Financial Inc. is known for its support of two major Bitcoin mining firms, Iris Energy and Core Scientific.
Financial Agreements with Iris Energy and Core Scientific
In September 2022, B. Riley entered into an agreement with Iris Energy for the sale of up to $100 million in equity until 2024. Additionally, the bank proposed a $72 million non-cash pay financing deal to Core Scientific in December of the same year.
B. Riley’s Response and SEC Actions
A spokesperson for B. Riley stated that the bank has not received any communication from the SEC regarding this matter but would fully cooperate if an inquiry is made. As of now, no public accusations have been made against B. Riley by the SEC.
Hot Take: B. Riley Faces SEC Investigation Amid Crypto Market Involvement
Crypto-friendly bank B. Riley Financial Inc. is reportedly under investigation by the SEC for its transactions with a client connected to securities fraud. The investigation is linked to a criminal case involving the collapse of the Prophecy Asset Management hedge fund. B. Riley’s involvement in the crypto market as a backer of Bitcoin mining firms Iris Energy and Core Scientific adds an interesting element to the investigation. While B. Riley denies receiving any communication from the SEC, it remains to be seen how this investigation will unfold and its potential impact on the bank’s reputation in the crypto industry.
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