A leading regulator in China is investigating an obscure porcelain and educational company that has become one of the most sought after blockchain stocks last week.
The Guangdong Great Wall Group, whose course has soared for five consecutive days last week after Chinese President Xi Jinping hired blockchain technology, announced Monday that he was the subject of An investigation by the Chinese Securities Regulatory Commission. The investigation comes as the government launches a call for "rational" investments in Chinese blockchain and fintech companies.
In its 2018 annual report, Great Wall Group, a creative porcelain company created in 1996, provided detailed information on six blockchain projects, but investigators wondered whether this new strategy was genuine given its recent rise in inventories. .
According to the company's ranking on the Shenzhen Stock Exchange, investigators are investigating potential violations of the disclosure regulation.
"According to the securities law of the People's Republic of China, the CSRC committee has decided to open an investigation against the cabinet," says the document.
On October 28, the company received a request from ChiNext, a board similar to that of the NASDAQ for the Shenzhen Stock Exchange, asking it to explain how its activities are related to the blockchain sector, according to a separate document.
ChiNext needed more detailed explanations of the six research and development projects that, according to the company, were related to blockchain, out of 50 projects listed in the 2018 annual report, according to the rankings.
The exchange wishes to obtain more details, notably on the project context, the cycles, the amounts invested, the research team and the specific use cases.
He also asked about the benefits generated by the projects and how the profits and revenues from these projects affect the company's total profits and revenues in the last year and first three quarters of 2019.
According to the company's ranking, two of the six projects are being developed by its online training subsidiary Zhiyou Education, which plans to create a cryptocurrency ecosystem based on its OK Angel Coin software, which has only not yet developed.
"Both projects have not yet had an impact on our revenues and profits," the company said.
The other four come from its recently acquired education arm, Emerald Education Group.
"We lost control over Emerald Education," said Great Wall Group in a June filing with the Shenzhen Stock Exchange, adding:
"The subsidiary no longer provides financial statements and reports, so we are not able to explain the connection that exists between Emerald Education and blockchain technology."
Great Wall Group has taken legal action against Emerald Education Group over capital transfer litigation in August.
"We have been unable to control the decision-making process in terms of recruitment and funds due to resistance from Emerald's central management team," says the firm.
Great Wall Group's half-year and third quarter reports do not include Emerald's financial statements.
The Shenzhen Stock Exchange may suspend trading in Great Wall shares if it can not provide annual reports for two consecutive fiscal years because it has not been able to include Emerald's financial statements.
The market capitalization of Great Wall Group was RMB 2.627 billion as of November 4. The company did not immediately return a request for comment.
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CSRC Investigation of Great … from CoinDesk on Scribd