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 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.
An attorney for UBI Blockchain had no immediate comment on the SEC’s decision.
UBI Blockchain, whose market value tops $800 million, had been riding the digital currency frenzy 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.
Revolutionary Technology
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 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.
This article was provided by Bloomberg News.