An obscure porcelain and education firm is under investigation by a top Chinese regulator after it became one of the most sought-after blockchain stocks last week.
Guangdong Great Wall Group, whose stock price skyrocketed for five consecutive days last week after Chinese president Xi Jinping praised blockchain technology, said Monday it was under investigation by the China Securities Regulatory Commission. The investigation comes as the government appeals for “rational” investments in Chinese blockchain and fintech firms.
Great Wall Group, which started off as a creative porcelain firm in 1996, disclosed details about six blockchain projects in its 2018 annual report, but investigators have questioned whether this blockchain push is genuine in light of its recent stock bump.
According to the firm’s filing with the Shenzhen Stock Exchange, investigators are looking at potential violations of information disclosure regulations.
“According to the Securities Law of the People’s Republic of China, the committee of CSRC has decided to open an investigation against the firm,” the filing said.
The firm received an earlier request from ChiNext, a NASDAQ-style board for the Shenzhen Stock Exchange, on Oct. 28, asking the firm to explain how its businesses are related to the blockchain industry, according to a separate filing.
ChiNext required more elaborate explanations on the six research and development projects that firm claimed were related to blockchain, out of 50 projects listed in the 2018 annual report, according to the filing.
The exchange wants to know more details, including the projects’ background, cycles, amounts of investment, research team and specific use cases.
It also asked profits generated from the projects and how much the realized profits and revenue from the projects affect the firm’s total profits and revenue over the last year and the first three quarters of 2019.