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Regulator Sends Hyped Blockchain Stocks on Tel Aviv Exchange Crashing

Israel's securities authority announced it will block bitcoin-related companies out of stock indices

Lilach Baumer and Dror Reich 16:2012.12.17

Wednesday Update 12:00: on Tuesday market close, Natural Resource's stock was down 54.35% and Fantasy Network’s stock was down 28.26% on the Tel Aviv Stock Exchange. Both stocks are trending up this morning.

 

Stocks of two cryptocurrency-related companies listed on the Tel Aviv Stock Exchange are tumbling down in recent hours following an announcement by the Israel Securities Authority.

 

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The Israeli authority will not allow companies whose value is dependent on the bitcoin to be included in the indices of the Tel Aviv Stock exchange, said Chairman Shmuel Hauser in a press release earlier today. Mr. Hauser added that the authority might also block such companies from finding ways to list on the exchange until a suitable regulatory framework is put in place.

 

Israel's securities authority Chairman Shmuel Hauser. Photo: Amit Sha'al Israel's securities authority Chairman Shmuel Hauser. Photo: Amit Sha'al

 

 

By 4 p.m. Jerusalem time, Natural Resource stock was down 48.11% on the Tel Aviv stock exchange.

 

In the announcement, Mr. Hauser referenced Natural Resource Holdings Ltd., a Tel Aviv-listed shelf company. Natural Resource announced in a stock exchange filing last Sunday that it is negotiating a 75% acquisition of Quebec-based bitcoin mining business Backbone Hosting Solutions Ltd. On Thursday Natural Resource announced the deal was closed, pending board approval. Backbone, which registered in Canada in July, intends to operate under the name Bitfarms.

 

Between Sunday last week and Monday market close, Natural Resources stock shot up over 700%.

 

On Thursday, Natural Resource announced the deal was closed, pending board approval. Backbone, which registered in Canada in July, intends to operate under the name Bitfarms.

 

Natural Resources stock has seen a meteoric rise since; the company had a market capitalization of NIS 133 million last Sunday, and reached a market capitalization of NIS 964 million on Monday Market close.

 

"The digital 'commodities' we will be mining, through the proposed 75% acquisition of Backbone (AKA Bitfarms), are now a half a trillion dollar market," said Natural Resource's major shareholder Roy Sebag in an email sent to Calcalist. Mr. Sebag said the company mines crypto-currency tokens “as an incorporated business, no different than any other business within the global economy, accounting under IFRS, paying taxes, and creating jobs.”

 

“I don’t see what law passed by the legislature of Israel, under the companies act, would preclude such a business from operating. And as things presently stand, I don’t see any law or rule in the Tel Aviv Stock Exchange guidelines that would preclude any such company from maintaining a listing, so long as it met the quantitative standards," Mr. Sebag added.

 

Another company trading in high volatility on the exchange, Tel Aviv-based Fantasy Network Ltd. announced it had hired a blockchain advisor Sunday, sending its stock up 44% by market close. By Monday market close the stock was up additional 80%. In October, the company announced it will sell its fantasy sports division to its employees, essentially becoming a shelf company.

 

Until a month ago a company dealing in the online fantasy gaming industry, in October the company announced it will sell its fantasy sports division to its employees, essentially becoming a shelf company. On Sunday the company announced it had hired a blockchain advisor, sending its stock up 44% by Sunday market close and an additional 88% up by Monday market close.

 

By 4 p.m. Jerusalem time, Fantasy Network’s stock was down 27.17% on the Tel Aviv stock exchange.
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