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Chinese Media Warns of Companies Fraudulently Claiming Blockchain

Avatar Rick D. 3 weeks ago

Chinese state media has reported that local companies seem to be claiming to be using blockchain technology to boost their stock prices. Multiple firms have made statements saying that they are exploring blockchain technology. However, only a handful can prove it.

The report is reminiscent of previous incidents outside of China. During the culmination of the 2017 bull run, companies enjoyed spectacular stock increases off the back of a supposed interest in blockchain technology.

The Hottest Tech in China: Blockchain Endorsement Inspires Fake Company Claims

According to a report in Chinese publication Global Times, the state-owned Xinhua News Agency has warned against companies fraudulently claiming to have adopted blockchain technology. More than 500 of the over 3,000 listed companies say that they are using or working on blockchain systems. However, only 40 of them can back up their claims.

Speaking with Global Times, an adviser for the China Securities Regulatory Commission, Dong Shaopeng, said that companies making such claims fraudulently could face reprimands from stock exchanges, including fines and delistings.

The apparent explosion in blockchain activity in China follows the government officially endorsing the technology last month. NewsBTC has reported on numerous developments in the nation since president Xi Jinping made statements encouraging the adoption of blockchain tech in October.

The Chinese media report is reminiscent of the case of Long Blockchain, formerly Long Island Iced Tea. In 2017, the latter company rebranded, claiming to have switched focus from beverages to blockchain. Its stock price immediately soared on the news.

However, it was revealed that the company had made little progress towards its blockchain ambitions. Later still, it was delisted from the Nasdaq stock exchange, before being branded a “pump and dump” scheme by the FBI.

The agency discovered that two individuals profited massively by trading the rebrand. The pair were previously under investigation for securities fraud involving another company, Kelvin Medical. Information linking Oliver Lindsay and Gannon Giguiere to Long Blockchain was found on an iPhone seized as part of the Kelvin Medical case.

Although there are large numbers of companies lacking evidence supporting their claims to be exploring blockchain technology in China today, there are many examples in which Chinese institutions and firms are indeed adopting the technology. The sudden state-level interest has prompted some in the cryptocurrency industry to claim that the endorsement is bullish for all things blockchain – including digital assets like Bitcoin.

Despite its new found interest in the technology underpinning them, the Chinese government is clearly much less keen on decentralised, public cryptocurrencies. It was repeatedly warned against public speculation on digital assets. In a report published last month, NewsBTC’s Tony Spilotro speculates on why the nation’s apparent new love of blockchain might not pan out so well for cryptocurrency after all.

 

Related Reading: Analyst: Bitcoin Price Can Reach $50k On Macroeconomic Uncertainty

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