After stratospheric rise, a phantom social network’s shares nose dive
The good news for Cynk Technology is that the supposed social network’s shares resumed trading on Friday after a 10-day suspension by U.S. regulators.The bad news for Cynk: it’s shares plummeted 85%.
The Securities and Exchange Commission had halted trading of the company’s stock earlier this month because of concerns over “the accuracy and adequacy of information in the marketplace and potentially manipulative transactions in Cynk’s common stock.”
Before its suspension, Cynk’s(CYNK) shares, which traded as a penny stock, had soared more than 25,000% in value, despite a lack of revenue, assets, or even any users. The company’s meteoric rise had given it a market valuation of more than $6 billion – more established companies like Panera bakery, U.S. Steel, AOL, E-Trade and Cablevision – while generating headlines, suspicions of fraud and the attention of the SEC.
The Belize-based company, which was founded in 2008, has a mission statement describing itself as “a development stage company” with a focus on social networking. Fortune recently wrote about the string of Belize-based companies, including Cynk, with questionable origins and operations and also about Cynk’s connection to a small-time Las Vegas lawyer.
What is certain: A lot of people just lost their money.