Riot Blockchain names new CEO as interim leader departs

Key Points
  • Riot Blockchain, a cryptocurrency company, announced a new CEO and other leadership changes.
  • The new CEO is the former CFO, who was replaced last year.
  • Riot has announced three CEOs and one interim CEO since changing its name and business plan in October 2017.
Getty Images

Riot Blockchain announced a new CEO and other leadership changes in a press release Tuesday evening.

Jeff McGonegal takes over as chief executive officer. He is the company's former CFO and has been working as a consultant to it, according to the press release. Shares of Riot Blockchain skyrocketed after the former pharmaceutical company changed its name and business plan in October 2017. Riot has announced three CEOs and one interim CEO since then, according to press releases.

McGonegal originally joined the company as CFO in 2003, when it was AspenBio Pharma, a company developing an appendicitis test and working on veterinary reproductive science, according to an SEC filing. The company changed its name to Venaxis in 2012 and to Bioptix in 2016 before becoming Riot Blockchain, according to press releases.

Robby Chang took over as CFO in February 2018, and McGonegal continued at Riot until April, when he became a consultant, according to SEC filings and press releases.

McGonegal was not available for an interview, according to an email sent by Chang.

Riot has been led by interim CEO Chris Ensey since September. Ensey is now departing the company along with Jeffrey Vormittag, who was the chief operating officer of the subsidiary Riot Blockchain Canada Inc, according to a press release.

Ensey and Vormittag did not immediately respond to CNBC's request for comment.

Ensey became interim CEO after John O'Rourke, the former CEO, resigned in the wake of unrelated allegations by the SEC over what an SEC press release called "lucrative market manipulation schemes."

On Friday, Riot said it dismissed its independent registered public accounting firm, which audits the company. The company had been using MNP, LLP but is now switching to Marcum LLP, according to an SEC filing. MNP was only Riot's accounting firm for slightly more than a year. The company dismissed EisnerAmper in January 2018, according to an SEC filing.

A CNBC investigation in February 2018 found a number of red flags in the company's SEC filings that might make investors leery. The investigation revealed annual meetings that were postponed at the last minute, sales of stock by company insiders soon after the company's name change, dilutive share issuances on favorable terms to large investors, confusing SEC filings and evidence that a major shareholder was selling shares while everyone else was buying.

O'Rourke accused CNBC of publishing "a negative one-sided piece."

"We have made significant inroads in building a diversified portfolio of investments and to begin securing digital assets," O'Rourke said in a letter to shareholders the day the CNBC investigation aired.

As bitcoin's price hit record highs in late December 2017, Riot was making news on a daily basis. The company's stock shot from $8 a share to more than $40 as investors chased the craze of all things crypto. The stock fell 3 percent on Wednesday, to $1.89.

Riot warned in its annual report last April that it "may never become profitable." 

"Even if we achieve profitability in the future, we may not be able to sustain profitability in subsequent periods," the report said.