The Security and Exchange Commission has halted trading in a former penny stock whose value has soared to almost $6 billion despite having few customers and almost no revenue.
The SEC has halted trading in Cynk Technology "because of concerns regarding the accuracy and adequacy of information in the marketplace and potentially manipulative transactions in Cynk's common stock," the regulator said in a statement Friday.
Cynk is an unlisted 'over-the-counter' stock that is the corporate owner of an online venture called introbiz.com. That's the website for a social media network which differs from others because it allows users to pay money to access the network and contact information of anyone else on the network, for a fee.
Numerous Hollywood celebrities are listed on the homepage, and the site alleges that their contact information can be purchased for $50 US each.
According to regulatory filings, the company had $0 revenue in its most recently-completed quarter, and has lost more than $1.5 million since being founded in 2008.
Cynk is incorporated in Nevada, but has a business address in Belize City, Belize.
Thinly traded penny stocks like Cynk are known as "over-the-counter", and don't trade on large exchanges like the TSX, NYSE and Nasdaq. Instead, they are traded through dealer networks.
The stock was holding steady at about 11 cents a share until the middle of May, until trading in the company exploded to the point where the stock was briefly above the $20 level, enough to push the company's total value to more than $6 billion. Before the trading halt was implemented, Cynk shares were changing hands at $13.90 a share.
The trading halt will remain in place until July 24, the SEC said.