China’s Shenzhen Stock Exchange (SZSE) has announced its intentions to crack down on businesses which are attempting to boost their stock prices by mentioning the integration of blockchain technology into their businesses.
In an letter sent Monday to IT services firm Zheijiang Enjoyor Electronics Co. Ltd, SZSE raised concerns regarding a March 16th message on the firm’s WeChat account. In the post, Enjoyor Electronics announced the news of a partnership of an affiliate company with a forensic sciences center in Zhengjiang to issue the world’s first blockchain-based electrical data forensic certificate.
As an aftermath of the announcement, the company’s share prices skyrocketed and hit the daily 10 percent trading limit set by trading policies in the country.
Alerted by the activity on the market, SZSE asked Enjoyor Electronics to specify when and how it invested in the mentioned company, how many shares it holds, and whether the company used the blockchain news to speculate. Other information the exchange requested included the company’s main business, financial figures, and a proof of its blockchain-based forensic procedure.
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As a result, Enjoyor Electronics deleted the announcement from its WeChat account.
This is not the first case of a company attempting to ride the hyped blockchain wagon without actually being in the industry. More than 20 listed companies have been questioned by the Shenzhen and Shanghai exchanges about their suspicious speculation on the blockchain technology, reported China Money Network.
A similar wave is also prevalent in the western markets as in December last year, a small beverage firm’s share soared 400 percent in a day after it changed its name from Long Island Iced Tea Corp. to Long Blockchain Corporation.
In a statement, Shenzhen Stock Exchange said: “Shenzhen Exchange will closely monitor relative companies’ disclosure and their stocks in the secondary market. Companies that use blockchain to speculate and mislead investors will receive disciplinary punishment, and severe violations will be reported to the China Securities Regulatory Commission.”