Chinese authorities are undertaking massive efforts to rein in the growing scam industry that is abusing the word ‘blockchain’. As part of this effort, the Shenzhen Stock Exchange announced that it will be punishing companies that publish speculative statements on blockchain technology.
The news comes amid an increasingly popular tactic used by companies to attract attention to their shares. The Shenzhen Stock Exchange’s announcement follows steep gains in the share prices of more than a dozen companies listed on its market.
According to an official statement published by the Chinese exchange, the venue is undertaking a review of 17 companies. The move aims to find out the causes of abrupt share price movements. The exchange will also seek clarification from listed firms that have mentioned that they are involved in blockchain technology.
The companies that are being targeted by the probe have not been publicised.
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The move undertaken by China’s second largest stock exchange is part of a much broader crackdown on blockchain name abuse. Several companies have been using the hip term to attract investors, with scam artists continuing to raise money despite the country-wide ban on cryptocurrencies and ICOs.
China has been actively pursuing the crypto industry to prevent cyber crimes. Token sales that are in any way affiliated with blockchain technology are the focus of a new effort coordinated by local authorities. The move comes as a response to the increasing number of occasions when firms have been using the term to attract more investors.
The coalition of Chinese authorities includes the People’s Bank of China, the Ministry of Public Security, the Ministry of Industry and Information Technology, the Supreme People’s Attorney Office, and the Supreme People’s Court.
According to the officials, a total of over 2,000 token sales have been identified as abusers with another 3,000 promoting fake blockchain products. Companies and individuals that use the ‘blockchain’ term for popularisation purposes could be facing criminal charges.
As the recent drop in crypto prices unfolds, the blockchain name could actually backfire should the slide continues. The prices of companies that are affiliated with cryptocurrencies and blockchain tanked yesterday.