SEC Trading Suspensions of QMMM, SDM – New SEC Cross-Border Task Force
On September 29, 2025, the U.S. Securities and Exchange Commission (SEC) issued back-to-back trading suspensions for two foreign issuers listed on the Nasdaq Capital Market, underscoring regulatory concerns about fraudulent, social-media-driven stock manipulation. These are the first SEC trading suspensions since October 2024, making the actions both rare and significant.
Smart Digital Group Limited (SDM) and QMMM Holdings LTD (QMMM) in the SEC’s Crosshairs
- Smart Digital Group Limited (SDM) is a Cayman Islands holding company with principal executive offices in Singapore, listed on the Nasdaq Capital Market on May 1, 2024, at an IPO price of $4.00 per share. By the close of business on September 28, 2025, SDM’s stock had fallen to $1.85 per share—less than half its offering price.
- QMMM Holdings Limited (QMMM) is a Cayman Islands holding company based in Hong Kong, listed on the Nasdaq Capital Market on July 19, 2024, at an IPO price of $4.00 per share. By September 28, 2025, QMMM’s shares had soared to $119.40 per share, an extraordinary rise from its IPO level.
Both trading suspensions took effect at 4:00 a.m. ET on September 29, 2025, and are scheduled to terminate at 11:59 p.m. ET on October 10, 2025.
The Crypto Treasury Trend
QMMM, which had been trading around $1 per share through May 2025 and June 2025, saw a slow price increase to $11 per share between July 2025 and September 8, 2025. Then, on September 9, 2025, the company announced a transition from digital media advertising to cryptocurrency. The frenzy created by the press release skyrocketed the stock price to over $300 per share during midday trading, before closing at $207 per share.
QMMM is just one of the latest publicly traded companies to shift its business focus to capitalize on the crypto treasury trend.
- In April, Upexi (UPXI) became the first small-cap company, with the stock jumping from $3 to $22 following the announcement that the company would be accumulating Solana coins for its treasury.
- Sharplink Gaming (SBET) surged from $6 to $124 in late May 2025, following its announcement.
- Bitmine Immersion Technologies (BMNR) surged from $4 to $166 in early July 2025, following its announcement.
- Eightco Holdings (ORBS) rose from $1.45 to $83 on September 8, 2025, following its announcement.
- Brera Holdings (BREA) rose from $7 to $52 on September 18, 2025, following its announcement.
- Agriforce Growing Systems shot up from $2.41 to $8.99 on September 22, 2025, after making its announcement.
This trend follows the Trump administration’s easing of crypto enforcement, the Trump family’s establishment of a crypto empire, and Donald Trump’s announcement that the U.S. government would launch its own crypto reserve.
Heightened SEC Scrutiny and the Cross-Border Task Force
Just weeks before these suspensions, on September 5, 2025, the SEC unveiled a new Cross-Border Task Force to investigate potential securities law violations involving foreign-based companies. This was the first major enforcement initiative under the SEC’s new Enforcement Director, Margaret Ryan.
The Task Force reflects the Commission’s sharpened focus on overseas issuers accessing U.S. capital markets, with an emphasis on combating pump-and-dump schemes and related manipulation. The initiative also expands oversight of the “gatekeepers” who facilitate U.S. listings by foreign issuers—especially auditors and underwriters.
Special attention is directed toward companies originating from high-risk jurisdictions such as China, where state influence and opaque governance structures often make it difficult for U.S. regulators and investors to obtain reliable information. Chairman Paul Atkins has directed several SEC divisions, including Corporation Finance, Trading and Markets, and Examinations, to consider new disclosure requirements and potential rule changes to address these risks.
Why the SEC Suspended SDM and QMMM
In nearly identical suspension orders, the SEC cited potential manipulation through recommendations made to investors by unknown persons via social media, which appear to be designed to artificially inflate the price and volume of the securities. The parallel language suggests a coordinated—or at least strikingly similar—pattern of activity.
The suspensions highlight the SEC’s concerns that the Nasdaq Capital Market, with its lower listing standards and thinner trading volumes, remains especially vulnerable to fraudulent promotion and manipulation by foreign actors.
Pump-and-Dump Risks and Gatekeeper Liability
The SEC has long warned about schemes in which fraudsters acquire control of a low-priced stock, aggressively promote it with false statements to drive up trading (the “pump”), and then liquidate their holdings at inflated prices (the “dump”). A variation—sometimes called “ramp-and-dump”—relies on trading activity itself to create the illusion of market demand.
Regulators are increasingly concerned about the role of foreign financial institutions, nominee accounts, and offshore intermediaries in facilitating these schemes. Common hallmarks include large blocks of shares held by offshore nominees, rapid transfers of stock across layered accounts, and concealed beneficial ownership.
The SEC, FINRA, and FinCEN have each issued guidance warning of these patterns. FINRA, in particular, has stressed that underwriters serve as critical gatekeepers when distributing securities to the public and face liability under Sections 11 and 12 of the Securities Act if they fail to exercise adequate due diligence. Similarly, auditors are obligated under Section 10A of the Exchange Act and PCAOB standards to approach audits with professional skepticism and to consider potential fraud risks.
The SEC’s new Task Force is expected to scrutinize whether gatekeepers are fulfilling these responsibilities or enabling cross-border fraud.
Nasdaq’s Process During and After a Suspension
When the SEC invokes Section 12(k) to suspend trading, Nasdaq must halt trading immediately under code T12. During the suspension, all trading in the securities is frozen across U.S. markets. When the suspension expires, Nasdaq reviews the company’s compliance with continued-listing standards before allowing resumption. If deficiencies remain, Nasdaq may initiate delisting proceedings.
Implications for Investors
- Frozen Liquidity: Investors cannot buy or sell the stock while suspended.
- High Volatility on Resumption: Prices often open far from pre-suspension levels.
- Enforcement Obstacles: Even successful lawsuits against foreign issuers may be unenforceable abroad due to weak treaty coverage, local policy defenses, or difficulties tracing assets.
- Delisting Risk: A delisting can shift trading to the OTC market, where liquidity and transparency are far lower
The SEC trading suspensions of QMMM and SDM demonstrate how quickly the SEC can act when it sees signs of manipulation—and how vulnerable U.S. markets remain to risks posed by thinly traded foreign issuers. Combined with the launch of the Cross-Border Task Force, these actions signal a more aggressive enforcement posture toward overseas companies and their gatekeepers. For investors, they serve as a reminder that opportunities on the Nasdaq Capital Market come with heightened risks, particularly when dealing with foreign issuers operating through offshore structures.
If you have questions about this blog post or would like to speak with a Securities Attorney, Hamilton & Associates Law Group, P.A. is ready to help. Our Founder, Brenda Hamilton, is a nationally known and recognized securities attorney with over two decades of experience assisting issuers worldwide with going public on the Nasdaq, NYSE, and OTC Markets. Since 1998, Ms. Hamilton has been a leading voice in corporate and securities law, representing both domestic and international clients across diverse industries and jurisdictions. Whether you are taking your company public, raising capital, navigating regulatory challenges, or entering new markets, Brenda Hamilton and her team deliver the experience, strategic insight, and results-driven representation you need to succeed.
To speak with a Securities Attorney, please contact Brenda Hamilton at 200 E Palmetto Rd, Suite 103, Boca Raton, Florida, (561) 416-8956, or by email at [email protected].
Hamilton & Associates | Securities Attorneys
Brenda Hamilton, Securities Attorney
200 E Palmetto Rd, Suite 103
Boca Raton, Florida 33432
Telephone: (561) 416-8956
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