SEC revokes blockchain firm's trading licence, claiming it doesn't actually have a product or service

Edward Matthew Ward’s painting in the style of Hogarth depicting the South Sea Bubble. Original displayed at the Tate Gallery

The US securities and Exchange Commission (SEC) has temporarily revoked the trading license of a Chinese Blockchain company due to “unexplained” market activity.

UBI Blockchain Internet, which is based in Hong Kong, previously focused its attention on automated, climate-controlled, specialist units for energy companies.

But since 2016, the company has been trading as UBIA – scrapping its original name JA Energy. It now claims that it develops “blockchain technology, the Internet of Things, biomedical technology, and stock capital market technology which focuses on food and drug safety issues”. 

UBIA recently wrote to the US regulatory body to say that it is in the process of working on a product that can “trace a food or drug product from its original source within the context of the Internet of Things to the final consumer”. 

However, it failed to meet the SEC’s deadline for making a standard 10-K filing for its end of financial-year accounts. As a result, the regulator became suspicious of UBIA’s market activities.

UBIA is owned by film production company Almost Never Films and it, too, failed to meet this deadline. An SEC filing, which was published on 5 January, explains that UBIA’s trading rights have been put on pause.

Last month, the company’s shares mysteriously exploded in price from $9 a share to $87, which alerted the SEC. Following this unexplained rise in its stock price, it appears that the company’s bosses planned to sell 72.3 million shares – another red flag for regulators.

In a statement, the SEC said: “The Commission temporarily suspended trading in the securities of UBIA because of

  1. Questions regarding the accuracy of assertions, since at least September 2017, by UBIA in filings with the Commission regarding the company’s business operations; and,
  2. Concerns about recent, unusual and unexplained market activity in the company’s Class A common stock since at least November 2017.” 

Cryptocurrencies based on Blockchain – and any company that announces products or services based on Blockchain – have exploded in value over the past year.

However, it has also been likened to the South Sea Bubble of 1720 that nearly bankrupted Sir Isaac Newton and the Netherlands’ tulip mania of the seventeenth century. 

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