The Shenzhen Stock Exchange is slowing mania over blockchain technologies by suspending trading for 17 companies that saw a sudden leap in value, The Edge Markets reports.
Worldwide speculation over bitcoin and other encrypted digital currencies built on blockchain technology has led several companies to link their profits to that rising tide. When the Long Island Iced Tea company renamed itself Long Blockchain, its stock price rose 500 percent and shares of the small financial firm Longfin soared over 1300 percent when it announced the purchase of a cryptocurrency of no real value.
In China, Shenzhen Kaifa Technology got a 15 percent bump in their stock price after vague announcements of “blockchain projects with well-known companies.” They soon backpedalled to say they're not a blockchain company, but simply produce bitcoin mining machines (despite a seeming crackdown on cryptocurrency mining).
READ MORE: Why Beijing is Leading China's Bitcoin Revolution
Sichuan Shuangma Cement Company also came out to deny rumors that it’s developing blockchain technology, as has Shanghai’s U9 Game.
These denials came just days before the January 16 announcement that the Shenzhen Stock Exchange halted trading for 17 unnamed firms “to review the causes for unusual share price movements, clarification on companies’ involvement in blockchain technology and potential impacts on their bottom lines.”
The move may exacerbate the ongoing tumble in the price of bitcoin, now trading below USD11,000 – a 47 percent drop from its record high last December. Analysts are already pointing to Asian regulators as the proximate cause of bitcoin’s recent slump.
But if this move helps clear the market of companies trying to scam their way into crypto profits, this could prove just a temporary dip in the cycle. Only time will tell how much air is left in this bubble.
[Images via pxhere, The Next Web]
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