Last year, many small and medium enterprises (SMEs) added the word "blockchain" to their name and increased their market capitalization vertiginously. The time had the last word, and in 2018 most of these projects lost the gained ground, and in some cases, they faced legal battles.
In the last quarter of 2017 bitcoin reached its historic maximum. This is well known. In all the media there was talk of bitcoin and out of nowhere came many "experts" who predicted unreal price increases. The fever of the cryptoactives traveled all over the world, especially when on December 17, with the launch of the futures, Bitcoin came to a price of $ 20,000 .
As in all good business flourishing, there was no shortage of people who took advantage of this situation to make a profit. In this recount, CriptoNoticias offers a list of some of the companies that announced activities related to cryptoactives and boosted their actionswithout meeting the expectations generated.
Company of Great Britain that made a fortune in October of last year, when the crypto-active had already become fashionable. Its nominal value increased by 394% just by announcing that it would change its name .
From On-Line Plc, it was renamed On-line Blockchain Plc. The market capitalization of the company reached 4.4 million pounds, about 5.8 million dollars. Back then, investors were enthusiastic about any initiative that would put "blockchain" in their name. Since 2005, this company has not achieved a historic maximum in the price of its shares.
However, despite all the spectacle that surrounded the change of name, the projects of this company did not materialize.
According to MarketWatch data , this company has lost 76% of its capitalization in 2018 . The current figure handled is 1.86 million pounds (about 2.36 million dollars).
Longfin was a company that acquired Ziddu.com , a startup that used cryptoactives to provide loans. Between December 13 and 18 last year, the shares of this company increased dramatically . Thus, they were initially worth 5 to almost 143 dollars in their Public Offer of Sale (IPO).
However, at the beginning of April, the SEC initiated an investigation of fraud against it , which caused the shares to fall again. Since it was made public that the SEC was investigating this company and requested documents related to the purchase of Ziddu.com and the IPO, its shares lost value. Of 59 dollars, which was the quotation for that moment, the shares fell to 13 dollars.
Finally, the SEC froze the funds to several of its members . Amro Izzelden Altahawi, its director and corporate secretary, as well as his collaborators Dorababu Penumarthi and Suresh Tammineedi, were involved. The SEC accused these individuals of illegally selling part of their shares, taking advantage of their price increase. In addition, the SEC discovered that the Longfin CEO issued more than 2 million unregistered shares to Altahawi. Tens of thousands of actions went to Penumarthi and Tammineedi.
These defendants would have amassed profits of more than 27 million dollars. Longfin was expelled from Nasdaq, the second largest stock exchange in the world.
Riot Blockchain also changed its name, and obtained a 750% increase in its shares . Initially its name was BiOptix Diagnostics and it was linked to biotechnology. At the end of September it was trading at $ 5.16 and in the first half of December it was worth almost $ 39.
In January, a Mexican bank began legal proceedings to have its shares traded on the Mexican Stock Exchange (BMV). This would turn the company into the first company linked to the cryptoactives to be listed on that stock exchange. The shares would be available in February of this year.
The CEO of this company earned about $ 870,000 in January. For this, it sold 30,383 shares at a price of $ 28.61 each. But, in February, Riot Blockchain was involved in a class action lawsuit by those who bought the shares. The plaintiffs alleged that their representatives did not mention, before the sale, that their previous activity was biotechnology.
In April, the SEC issued a document requesting "rating the company's assets." This caused the company to be threatened with leaving Nasdaq. According to MarketWatch , in 2018 Riot Blockchain lost almost 95% of its market capitalization .
Long Blockchain , on the other hand, was selling iced tea and was formerly called Long Island Iced Tea Corp. The company changed its name on December 21 and obtained a 500% increase in its shares . Although he said he would not leave the iced tea business, the company would seek to invest or ally with companies related to the cryptoactive.
For January, the company announced that it would sell 1.6 million shares at $ 5.25 each. The members of this company set the goal of 8.4 million dollars. With this money, they would buy bitcoin mining equipment manufactured by Bitmain. With his name change, he joined Nasdaq. However, in April of this year she was expelled , of course improper behavior.
The company tried to change its commercial strategy by entering the market for loyalty and gift cards. However, the SEC also targeted this company and in August it called on its representatives to record the relevant documents.
BLOCKCHAIN MINING LTD
The owners of the company Natural Resources LTD also saw an opportunity in the cryptoactives. Thus, they decided to abandon iron and gold mining in December 2017. And although they did not have the necessary tools, they opted for a new mining business: cryptocurrencies.
The shares of this company increased 9000% . This company has the record of this recount of companies not linked to cryptoactives that increased their value with the mere inclusion of the word blockchain in their commercial name.
Blockchain Mining LTD is located in Israel and is currently called BitFarms Technologies Ltd. The increase in its shares was so important that the Israel Securities Authority (ISA) prohibited all companies from investing, possessing or undermining cryptocurrencies participating in the market of shares of Tel Aviv (TASE). Because of this, the company announced in January that it planned to enter Nasdaq and the Toronto Stock Exchange. In the last three months it has lost 48% of its value, according to MarketWatch .
The word "blockchain" was sold as a magic solution in 2017, which would serve any case of business use. The 2018 collapsed this false belief, as demonstrated by the fate of these companies that wanted to profit with a passing fad.