The SEC will continue to crack down on potentially fraudulent initial coin offerings for the foreseeable future. Most recently, it temporarily suspended all trading of UBI Blockchain Internet LTD securities. Known as UBIA, the Hong Kong-based venture has gotten in the crosshairs of the SEC in recent weeks. There are quite a few questions regarding this project which will need to be clarified. Whether or not the answers will be satisfactory seems highly doubtful right now.
UBIA Securities Trading Suspended by the SEC
In a way, it is good to see that the SEC is continuing its mission to crack down on initial coin offerings and securities which raise more questions than answers. It has shown some great initiative on this front in the past few weeks, and it seems the real work has only just begun. Its latest “victim” is UBI Blockchain Internet, a Hong Kong-based venture, whose securities have been barred from trading for the next two weeks.
This decision comes as a result of some oddities noted by the SEC as far as this project is concerned. More specifically, there are questions regarding the accuracy of assertions dating back to September 2017. UBIA did file with the SEC regarding its securities listing, but the day-to-day operations of the company raise some questions. Additionally, there are concerns over recent unusual market activity involving the company’s Class A common stock which became apparent in November 2017.
As a result, no UBIA shares or securities can be traded between now and January 22. It is evident the SEC wants to take all of the necessary precautions when it comes to any project which may be considered to be controversial. Additionally, the SEC is cautioning shareholders, broker-dealers, and prospective purchasers of these securities to carefully consider the information revealed to the public. It is evident that UBIA raises some red flags in the regulator’s view, but it remains to be seen how this investigation will unfold in the coming weeks.
The UBIA shares rose from US$9 all the way to US$87 in the span of one week, and have since dropped back down to US$22. This type of behavior is reminiscent of pump-and-dump schemes in the cryptocurrency world. It is not the first time we have seen shares of cryptocurrency or blockchain companies surge and then collapse soon afterward. The Crypto Co. and Long Blockchain Corp. have also been scrutinized due to similar events.
Whether or not the SEC will uncover anything illegal in this case remains to be determined. It is certainly true that this trading behavior raises a lot of questions which may not be all that easy to answer right now. At the same time, it is possible the company itself isn’t at fault here. Manipulation is a key element in any financial market, and neither stocks nor cryptocurrencies are any different in this regard.
Behind the scenes, UBI Blockchain is currently working on a product tracking system which makes use of blockchain technology. There is no real reason for its shares to suddenly jump in value and then crash shortly afterward. After all, its product is far from finished right now. Any company associated with blockchain will automatically attract a lot of attention, though. It’s an interesting situation well worth keeping an eye on over the next few weeks.
You may be interested
Opinion | What is a Security Token Offering (STO) and Why You Need an AdvisorBrian Evans - Oct 08, 2018
About the Author: Jaron Lukasiewicz is the CEO and founder of Influential Capital. Jaron has been an executive in the industry since 2012, previously serving as CEO of Coinsetter, one…
World Economic Forum: Blockchains improve Global EconomyBrian Evans - Oct 08, 2018
Beginning as a technology for financial ledgers only, blockchains have grown to become the corporate hype word around the globe. It’s touted as the invention that will…
‘Rehypothecation’: More about the Wall Street Practice that Could Ruin BitcoinBrian Evans - Oct 08, 2018
Note: This is part 4 in a multi-part article series exploring rehypothecation and commingling in bitcoin and other cryptocurrency markets. Part 1 and part 2 are interviews…