Chinese Stock Exchange Probes Firm's Blockchain Claim Amid Stock Rally

A public company in China is being questioned over a blockchain claim that appeared to drive a rally in its stock price.

AccessTimeIconMar 19, 2018 at 11:00 a.m. UTC
Updated Dec 10, 2022 at 8:18 p.m. UTC

The Shenzhen Stock Exchange (SZSE), one of the two government-led stock exchanges in China, is probing a public company's claimed links to a blockchain project that appeared to drive a rally in its stock price.

In an letter sent Monday to IT services firm Enjoyor, the bourse raised concerns over an article published via the company's WeChat channel on Friday, March 16, that touted a successful trial of a blockchain solution by a company in which Enjoyor holds a stake.

Following the publishing of the article, the letter states, Enjoyor stock surged 10 percent, reaching a daily limit imposed by trading policies in the country.

Shenzhen Stock Exchange, founded in 1990, while itself not a securities regulator in China, is nonetheless a government-led organization that self-regulates listed public companies to ensure they comply with securities laws in the country.

According to the exchange, although the Enjover article has since been removed, the firm had boasted that the blockchain trial, completed by Chinese startup Numbullhttp://www.numbull.com/about/company, is the world's first blockchain application that can authenticate certificates in the field of forensic science.

The authenticity of this claim appears to have drawn immediate attention from the SZSE, which has now ordered the firm to submit substantial evidence to prove its claim.

In essence, the stock exchange is seeking to determine whether the firm's report was intentionally misleading, and meant to take advantage of blockchain hype to drive up its stock price.

SZSE is demanding a formal response from the firm to disclose details of its ownership stake in Numbull, including the time, amount and nature of its investment, and whether Enjoyor has a major influence over the firm's operations.

Furthermore, the exchange is requiring the firm to provide details of blockchain application, including how it's operated, details of the trial and how it would generate revenue, as well as whether the solution is entitled to the claim of being a "world first."

SZSE image via Shutterstock

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