No revenue, no assets, yet worth US$billions: stock regulators pull plug on social networking firm
No revenue, no assets, yet worth US$ billion for no apparent reason - US authorities pull the plug on penny-stock social-networking company
Financial regulators in the US suspended trading in a social-networking company with no assets, no revenues and one employee, whose value on the stock market soared to US$6 billion in a matter of weeks.
Fuelling talk of another dotcom bubble, shares in a previously unknown Belize-based technology firm, Cynk, had risen 25,000 per cent from the middle of June before they were suspended on Friday ahead of the start of trading in New York.
The stock's runaway rise had made the profitless company more valuable than Domino's Pizza, JetBlue or Spotify - even as a chorus of critics cited mounting evidence that there was little substance behind the company.
Listing its business address in Belize but filing out of Nevada, the company said it intended to create a social-network business.
After the company's shares skyrocketed in value for no apparent reason, the US Securities and Exchange Commission and Financial Industry Regulation Authority (Finra) decided to pull the plug. Finra posted a trading suspension in the stock using its "Extraordinary Event Halt" code. The SEC followed with its own suspension shortly afterwards, extending the trading hiatus until July 24.
Identified in regulatory filings as a Nevada corporation, it has a business address in Belize City, Belize. Financial statements with the SEC show no assets, no sales and no positive cash flow. Its last quarterly report, from the third quarter of 2013, shows a net loss of US$11,275 for the period.
An investor named Marlon Sanchez was listed as owning 72 per cent of the 291 million outstanding shares. But he had sold his stake, according to a June 11 letter to OTC Markets Group, operator of the OTC Pink market on which Cynk shares traded.