Israeli Regulator Piles Pressure on Companies Latching to Crypto Hype

Requests for clarification by the Israeli regulator sent local companies rushing to get their filings straight

The Israel Securities Authority (ISA) is tightening supervision on crypto-related announcements by firms trading on the Tel Aviv Stock Exchange.

 

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In December, investor hype regarding cryptocurrency-oriented stocks led then chairman of the authority Shmuel Hauser to announce the authority will not allow companies whose value is dependent on the bitcoin to be included in the indices of the exchange, and may block such companies from listing altogether until a regulatory framework is put in place.

Tel Aviv Stock Exchange. Photo: Bloomberg

 

In January, the authority proposed a rule that would bar companies that trade or mine cryptocurrencies from being listed on the Tel exchange. Such a rule necessitates the signature of the finance minister.

 

In December, Tel Aviv-listed solar energy company Apollo Power Ltd. announced it has conducted an experiment to use solar energy to power cryptocurrency mining, adding millions of dollars to its market capitalization overnight. Following a request for clarification from the ISA, the company disclosed that the experiment had yielded insignificant sums, rendering the earlier announcement mute and leading to a class action suit against the company.

 

On Tuesday, Apollo Power announced that the ISA is conducting an administrative inquiry into the company and senior executives as a result of December's reports. On Wednesday, Apollo filed a second announcement, clarifying that its scope of operations does not include either mining or trading of cryptocurrencies, and that while the company's technology might potentially enable users to do so in the future, it is not guaranteed. The company's stock fell 6.43% by Wednesday's market close.

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In December, Tel Aviv-listed media company Algomizer Ltd. announced it is looking to enter the blockchain and cryptocurrency industry in a stock exchange filing. On Tuesday, the company announced its intention to carry out an initial coin offering of tokens whose value is based on an external tradable asset through a third party. The announcement sent its stock 11.6% up by market close.

 

On Wednesday, following a directive from the ISA, Algomizer published an amended filing clarifying that since tokens are considered a security, offering them to the public will necessitate the submission of a prospectus to the U.S. Securities and Exchange Commission and that the company will only offer the tokens to accredited investors. Algomizer closed 1.2% down on Wednesday, and is currently trending down.