20 Chinese companies probed for riding blockchain bandwagon

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If 2017 was Bitcoin's year, then 2018 looks set to be the year of the blockchain, with many companies keen to promote their use of the new technology.

Blockchain has become such a buzzword that companies in China and around the world are claiming to use it in a bid to boost their stock with investors, even if their products or services have barely any relation to it.

On Tuesday, Beijing News reported that at least 20 companies listed in Shenzhen and Shanghai have been questioned, investigated or temporarily suspended for hyping up their use of blockchain technology.

VCG Photo‍

The latest company to be accused of jumping on the blockchain bandwagon, Zhejiang Enjoyor, published an article on WeChat on March 16, claiming it had launched “the world’s first digital forensic blockchain certificate” in collaboration with another company.

Don't believe the hype

The company’s share price suddenly went up, until three days later the article was deleted. Authorities from the Shenzhen Stock Exchange sent an open letter on Monday advising Enjoyor to fully disclose all details of the scope of its collaboration, as well as providing legal proof of the blockchain certificate it claimed to have launched.

The letter, which Enjoyor formally acknowledged in a WeChat post later on Monday, ended with a warning to comply with the law and not publish false or misleading information.

In January, the Shenzhen Stock Exchange had already been forced to publish a notice that 17 companies were being investigated for misleading the public over their use of blockchain technology.

Many of the companies used social media to give the impression they were embracing the technology, leading to significant rises in their stock prices.

From berries to blockchain

Jumping on the blockchain bandwagon is not just unique to China.

In December, small US drinks firm Long Island Iced Tea Corp changed its name to Long Blockchain Corporation, a bizarre move which actually saw its share price grow by almost 500 percent.

The investment surge came despite the company having absolutely nothing to do with blockchain, Bitcoin or cryptocurrencies.

Freshly squeezed blockchain? Cigar companies have also added "blockchain" into their official names. /VCG Photo

That came after shares in SkyPeople Fruit Juice soared by 200 percent, following a name change to Future FinTech.

Both companies have claimed they really are planning moves into cryptocurrencies, despite Future FinTech’s website still apparently focused on selling fruit juice.

Kodak's crypto moment

It’s not only relatively unheard of companies that are trying to ride the blockchain boom. Kodak, one of the biggest names in photography, announced in January it was setting up a blockchain-powered platform called KODAKOne, which would include its own digital coin (the KODAKCoin) and use the technology to protect image rights.

After almost 130 years in business, Kodak went bankrupt in 2013 but returned, despite making losses of 25 million US dollars in 2017.

The blockchain announcement pushed its share price up by 200 percent, while trade volume boomed by 20,000 percent.

From Kodachrome to blockchain? /VCG Photo

While some analysts believed the sudden change was genuine, others claimed it was a blatant leap onto the bandwagon just to raise funds.

Kerrisdale Capital called it “a last-ditch stock promotion gambit for a company hurtling towards bankruptcy.”

Without the same oversight and tight regulations of China’s stock exchanges, companies like Kodak, SkyPeople Fruit Juice and Long Island Iced Tea Corp have been granted the freedom to make outlandish changes to their businesses, all without being forced to provide any transparency, potentially misleading investors.