Chinese Stock Exchange Cracks Down on Blockchain Claims
The Shenzhen Exchange in China has started cracking down on companies using misleading blockchain affiliations to boost their stock prices.
Companies are always on the prowl for any means to boost their stock price. Such efforts can range from cutting costs to creating innovative new products. A recent trend is for companies to jump on board the blockchain bandwagon to provide an instant stock boost. The Shenzhen Exchange in China is having none of this, however, and has started cracking down on companies who are misleading consumers over claims of blockchain connections.
A number of companies in the Chinese market have proclaimed some form of blockchain affiliation, which has resulted in some dramatic increases in stock value. One such company is Zhejiang Enjoyor Electronics Co., Ltd., who posted on social media that one of their firms entered into a partnership to issue blockchain-based electric data forensic certificates.
Needless to say, this caused an explosion in interest for the stock of Zhejiang Enjoyor Electronics Co., Ltd., resulting in increased sales and a higher stock price. This caught the attention of the Shenzhen Exchange, the exchange where the company is listed.
The exchange then asked the company for more details in order to ensure there were no misleading or false statements. Some of the questions asked included how many shares it holds in the blockchain company, when the partnership took place, and other financial data. In the end, the company deleted their social media post.
Using Blockchain for Hype
The electronics company is not alone in using the blockchain as a means for self-promotion. The Shenzhen Exchange says that they have questioned 17 companies over such claims. The Shanghai Exchange also reports that they have identified 10 companies who are misleading investors about their true connection to blockchain technology.
This issue is becoming more common, causing the Shenzhen Exchange to post the following:
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.
This phenomenon is occurring throughout the world. Companies have even added blockchain to their name and seen their value explode. A UK company had their stock increase 433% in just a few hours due to the name change, and an iced tea company saw similar results. Even companies like Hooters have jumped on board the bandwagon, but the most notorious was Eastman Kodak, who saw their shares jump by 60%.
What does this all mean? It means that investors should do their homework and realize that most companies are willing to jump onto the latest trend, or lie about it, in order to artificially boost their stocks.
Have you been lured into investing in a company by them claiming some sort of blockchain connection? Let us know in the comments below.
Images courtesy of Pixabay and Bitcoinist archives.
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