Many companies have found a way to profit from the jaw-dropping growth of the cryptocurrency space over the past year. For some, it wasn’t even necessary to be involved in the blockchain or digital currency worlds in order to see big gains. For example, Long Island Iced Tea Corp. changed its name to Long Blockchain Corp. (LBCC) and saw its stock nearly triple overnight. (See more: Long Island Iced Tea Soars 280% After Renaming Itself Long Blockchain.)
But the path to profit has not been so smooth for other companies, as Hong Kong-based UBI Blockchain Internet Ltd. (UBIA) learned this week. The U.S. Securities and Exchange Commission (SEC) halted the trading of UBI stock based on “unusual and unexplained market activity.”
UBI Stock Rocketed 900% In 2017
UBI Blockchain, which enjoys a market value of more than $800 million, had an exceptionally good year in 2017. The stock climbed by more than 900% on the strength of the digital currency craze.
At the same time, UBI did not post any revenue, and in fact its phone number as listed in regulatory filings was disconnected, according to Bloomberg. The company bills itself as aiming to harness blockchain technology to aid customers in “[tracing] a food or drug product from its original source.”
The SEC halted trading on UBI stock over concerns that investors are misinformed or misled about the business. The regulatory body issued a statement earlier this week suggesting that “unusual and unexplained market activity” regarding UBI shares was enough to block trading.
UBI Blockchain CEO: Don’t Confuse Us With Bitcoin
For its part, UBI has been understanding about the confusion. CEO Tony Liu said the SEC decision was “understandable due to the recent frenzy of buying stock related to the bitcoin phenomena.” He also said his company has little, if anything, to do with bitcoin itself.
“We believe the general public is confusing our blockchain technology with bitcoin companies,” Liu explained. “[UBI was] involved in blockchain technology for well over two years before the bitcoin buying frenzy took place, and we plan to be in business for years after the bitcoin buying anomaly ends.”
At the same time, the company may have benefited from the craze when it changed its name to UBI Blockchain from JA Energy in 2016.
Last February, UBI shares sold for $0.55, and at its highest point in 2017, the stock sold for well over $100 per share. It is traded over-the-counter, and the SEC trading suspension will lapse on January 22nd. UBI is the latest blockchain-linked company which has seen pushback from the SEC. In December 2017, for example, the regulator halted trading in Crypto Co. when the company’s market value surpassed $11 billion in spite of a lack of profits and meager revenue.
Investing in cryptocurrencies and other Initial Coin Offerings (“ICOs”) is highly risky and speculative, and this article is not a recommendation by Investopedia or the writer to invest in cryptocurrencies or other ICOs. Since each individual’s situation is unique, a qualified professional should always be consulted before making any financial decisions. Investopedia makes no representations or warranties as to the accuracy or timeliness of the information contained herein. As of the date this article was written, the author owns small amounts of bitcoin, bitcoin cash, and ether. It is unclear whether he owns other bitcoin forks.