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Riot Blockchain to launch Crypto Exchange RiotX

Riot Blockchain, a United States-based enterprise has recently filed an application with the SEC to launch a new regulated cryptocurrency exchange called RiotX. The exchange will reportedly be launched by the end of Q2 2019. The news came through an announcement by the Securities and Exchange Commission on March 14. 

The enterprise has declared in its filing that its subsidiary, RiotX Holdings Inc would be responsible for operating the new exchange. Also, per the documents, SynapseFi’s Application Programming Interface (API) will handle the exchange’s banking services. 

The API will reportedly function as a security enhancement. It will track the user’s location which will help curb fraudulent use of the service. 

Moreover, RiotX users would have the facility to create accounts which will be connected to accredited banking institutions in the U.S.and transfer and hold both fiat and cryptocurrencies. Per the filing, the exchange will reportedly collaborate with exchange software provider Shift Markets.

In August last year, the SEC had intensified its investigation into crypto mining firm Blockchain Riot.

SEC’s Investigation on Riot Blockchain

The SEC’s investigation began after Riot Blockchain changed its name to include blockchain at the peak of industry hype. Also, they craftily shifted their focus from biotechnology to mining. The regulator had previously warned that a change in name to include blockchain would lead to increased scrutiny. The investigation created a lot of unrest in the Riot community.

Reed Brodsky, a partner at law firm Gibson Dunn, at that time said :

"This SEC subpoena and the order do not appear to be the type of regularly issued subpoena in the normal course of the SEC's oversight of registrants. The company has to take this very seriously. An adverse finding by the SEC could be devastating."

Jake Zamansky of securities law firm Zamanksy LLC further added

"The fact that the SEC division of enforcement is involved suggests they are considering securities fraud action against the firm,"

per a CNBC report. 

Blockchain Riot received an SEC subpoena April 9, which the firm had casually brushed off at the time, stating that several enterprises engaged with blockchain and crypto have received such orders. 

Per the CNBC report. April subpoena was related to matters which incorporated “the proper asset classification, applicability of the Investment Company Act [of] 1940, to the Company's business and affairs and accounting treatment of its cryptocurrency."

Furthermore, Shares of Blockchain Riot at that time reportedly dropped by over 12 percent.