Crypto treasury firms have been on the rise lately, attracting both investor attention as well as regulatory scrutiny.
While adoption may be growing, not every rally is being welcomed.
The SEC has been cracking down on companies experiencing sudden stock surges, especially around crypto announcements. QMMM Holdings Ltd, a digital advertising and marketing production service company, is the latest to face a trading halt after its shares shot up dramatically.
QMMM Trading Halted
According to a report from Bloomberg, the U.S. SEC has suspended trading in QMMM after the stock shot up nearly 1,000% in less than three weeks.
The regulator said the rally may have been fueled by anonymous social media posts urging people to buy the stock. Trading has been halted but is expected to resume at 11:59 p.m. ET on October 10.
QMMM’s $100 Million Crypto Push
Earlier this month, QMMM had revealed plans to build a $100 million diversified crypto treasury, with investments in Bitcoin, Ethereum, and Solana.
The announcement sent shares skyrocketing from $11 to over $200.
The company had also outlined its strategic shift into the crypto space, using blockchain and artificial intelligence.
While the move highlighted its push into digital assets, the suspension is a reminder that regulators are on alert for hype-driven rallies that lack strong fundamentals.
The Wider “Hype” Crackdown
QMM is not the only case. The SEC and FINRA have been tightening oversight of companies that make sudden pivots into crypto.
Critics note that companies adopt these strategies mainly to boost their stock prices. Due to these concerns, regulators are now tightening the rules.
Regulators have reached out to around 200 companies that announced crypto treasury strategies this year following suspicious trading spikes.
Nasdaq also now requires certain crypto treasury companies to get shareholder approval before issuing new stock to fund their crypto holdings. Companies that don’t follow the rules could even be delisted.
Corporate Crypto Adoption Still Growing
Despite this increased scrutiny, corporate adoption of digital assets is growing rapidly. Bloomberg reported earlier this month that 184 publicly traded companies have announced plans to raise over $132 billion for crypto investments.
Public companies now hold over 1 million Bitcoin, and many are expanding into altcoins like BNB, Ethereum, and Solana. Tom Lee’s BitMine Immersion, for example, is repeatedly making headlines for holding over $10 billion in ETH.
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FAQs
The SEC suspended QMMM trading after its shares surged nearly 1,000%, citing concerns the rally was fueled by social media hype rather than company fundamentals.
A crypto treasury is when a company, like QMMM, holds digital assets such as Bitcoin or Ethereum on its balance sheet as a strategic investment, similar to holding cash.
Yes, the SEC is increasing scrutiny on companies with suspicious stock surges following crypto announcements, ensuring price moves are based on solid fundamentals, not just hype.
New rules, including from Nasdaq, may require shareholder approval before companies issue new stock to buy crypto, helping to protect investors from speculative and risky maneuvers.
