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SEC halts crypto stock that surged 900 percent last year

Bloomberg logoBloomberg 1/8/2018 Matt Robinson

A Hong Kong-based company whose stock benefited from cryptocurrency fever to jump more than 900 percent last year had trading in its shares suspended by U.S. regulators over concerns that investors are being misled about the company’s business.

The Securities and Exchange Commission halted buying and selling of UBI Blockchain Internet Ltd. due to “unusual and unexplained market activity” for its shares, according to a statement issued Monday by the regulator. The SEC added that there are questions about the accuracy of assertions that the company has made in its financial statements.

a screenshot of a video game: Riding Bitcoin's Coattails?© Provided by Bloomberg LP Riding Bitcoin's Coattails?

UBI Blockchain, whose market value tops $800 million, had been riding the digital currency craze to stock market glory despite posting no revenue and including a disconnected phone number in its filings with regulators. The company plans to harness blockchain so that consumers can “trace a food or drug product from its original source,” according to its SEC filings.

Blockchain is the software ledger that makes bitcoin and other digital currencies possible. A wide range of industries including banks view it as a potentially revolutionary technology that could make it much easier to keep track of transactions.

UBI Blockchain Chief Executive Officer Tony Liu said the SEC’s decision is “understandable due to the recent frenzy of buying stock related to the bitcoin phenomena.” But some investors seem to be linking his company to a white hot market that it has no involvement with, he said.

“We believe the general public is confusing our blockchain technology with bitcoin companies,” Liu said in a Monday statement. UBI Blockchain 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.”

The company changed its name to UBI Blockchain from JA Energy in 2016.

UBI Blockchain shares traded as high as $115 in 2017, after selling for 55 cents last February. The surge made it one of the most-valuable public companies in the bitcoin universe. The stock trades over-the-counter, a market that typically has less stringent oversight than regulated exchanges. The SEC said its trading suspension lapses on Jan. 22.

Wall Street’s main regulator has been cracking down on crypto-related companies whose business prospects may not justify their high share prices. Last month, it halted trading in Crypto Co. after the company’s market value surpassed $11 billion even though it had just a few hundred thousand dollars of revenue and no profits.

Related video: Why cryptocurrencies could soon be facing a big crackdown (provided by CNBC)


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