The asset-less social network company’s market capitalization at the end of trading yesterday was just over $4 billion.
The strange story of Cynk, a company once known as Introbuzz that now is based in Belize and has one employee who owns 210 million of its 291 million shares, has come to a pause.
The Securities and Exchange Commission announced this morning that it was halting trading in Cynk effective this morning continuing for two weeks. The SEC said it was temporarily suspending trading in CYNK “because of concerns regarding the accuracy and adequacy of information in the marketplace and potentially manipulative transactions in CYNK’s common stock.”
The company, then known as Introbuzz, was founded in 2008 by a Seattle-area entrepreneur John Kueber. Kueber told BuzzFeed that the idea behind the company was to let people “associate value to their social networks” but that he “didn’t have the time or inclination to raise money for the business” after incorporating it. The business was transferred to Las Vegas internet marketer and event promoter Kenneth Carter, who also goes by Kenny Blaque, in October, 2011.
“I own no shares in the company and did not own any shares at the time of the IPO,” Kueber said. He explained that he had never actually met Carter in person: “a mutual associate had an interest in the Introbuzz concept and appointed him to lead and purchase the company from me but I passed on having any further involvement in the company,” he said.
Carter registered to sell stock in the company, eventually raising over $50,000. Carter says he never received any of the money and resigned from the company. Introbuzz was then taken over by Marlon Sanchez, a San Diego-area medical businessman, in April, 2013. A letter from the company’s then-lawyer says Sanchez’s share of the company was taken over by a new sole-employee, Javier Moreno.
Starting last month, trading in Cynk, a company with no assets or income that used to be called Introbuzz, exploded as the volume went from zero on most days to 367,400 shares traded on June 17. The surge in trading was accompanied by a suspicious string on near-identical tweets touting the stock, as it went up 2,261%, from 18 cents to $4.25.
The stock continued to rise upwards, and hit a high of over $21.55, giving it an on-paper market value than well established internet companies like Yelp or AOL. The company’s value was nearly entire illusory. Because of a 75-to-1 stock split last year, the company had a huge number of shares compared to how much trading ever actually happened in its unlisted stock.
Even at the height of the company’s social-media-fueled speculative trading Thursday, only 386,100 shares changed hands, a fraction of the total shares available. If the company’s majority owner, Javier Moreno, tried to sell more than a small portion, the price would tank. But the stock closed at $13.90 on Thursday on its highest volume of trading ever, so the traders who bought as it was setting new highs were left holding the bag.