The strange tale of an energy biz that suddenly became a blockchain upstart – and $1.4m now forfeited in sold shares America's financial watchdog, the SEC, has accused two men of illegally banking $1.4m by selling shares in the bafflingly renamed "blockchain" startup UBI Blockchain. The pair today agreed to hand back the alleged ill-gotten gains, plus cough up nearly $200,000 in fines. Essentially, it is claimed, they profited by selling …
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"An energy company playing fantasy finance?"
From the description, it doesn't sound like they were actually an energy company. They just threw out a bunch of buzzwords in the hopes that people would throw money at them :
"The Company was in the business of designing modular, self-contained, fully automated, climate controlled units for distributed production of energy.
The Company manufactures micro-production solutions that may be implemented in a range of contexts, from ethanol micro-production facilities to urban greenhouse gardens to third-world farming communities. The Company has not generated any revenues."
As far as I can tell, they've never made or sold a single product, all they've done is shuffled shares around and play with their name. Given how long it's been going, I'd be inclined to suspect money laundering or something rather than just being a straight investment scam, but there's certainly never been anything legitimate about it. It's not an energy company playing fantasy finance, it's just a fraud playing around with different kinds of fraud.
...as to why the SEC restricted the price they could sell the stock at in the first place. Surely any private transaction between buyer and seller, at a price that the buyer is willing to pay, and with full disclosure on part of the seller* about what they are selling, is legal in a modern open economy?
I'm guessing that the clue is that they were paid for legal work in "Class A restricted stock", but that does not make it any clearer, since stock classes and any restrictions on them are defined by the company, there is no generic stock classes and/or restrictions defined by the SEC.
So, anyone know what gives?
*A listed company is obliged to divulge certain financial and business information to the public so the public can make informed investment decisions. Companies and their directors can be fined/imprisoned for wrongful disclosure, so buying stock of a listed company it is assumed that the buyer knows** what they are buying into.
**even if they don't and are just seeing 'blockchain' in the name
Now that there is something that intrigues me. Especially the part where this mystery guy not only buys nearly all the shares, but then somehow is able to move the company to another part of the US. Just how did he know to put the company there and for what purpose ?
Where there communications between the pair and that guy to set all this up in the first place ? Because if not, I can't imagine some random guy in Hong Kong buying up a company in the US would care about moving it to some other place he almost certainly doesn't know either.
There's something fishy there.
It's likely the hong kong resident already had another business operating from delaware or it may be something similar to registered offices for UK companies.
the registered office does not have to be where the company trades from, just somewhere where any documents delivered will reach an official within the company, it's quite common for the address used to be the address of an accountant who is also the company secretary
Delaware is the second-smallest (by land area) state in the U.S. Thus, they hit on the idea of making really easy incorporation their main cash crop. It's not uncommon at all to see the note "A Delaware corporation" in small print on a company's ads or website.
Here's a brief spot to give you an idea of the scale:
http://www.businessinsider.com/building-wilmington-delaware-largest-companies-ct-corporation-2017-4
Delaware is where many companies reside simply because it offers a better business climate than most other states as some are downright byzantine and that's especially true for publicly traded companies. If I remember the statistic correctly it's something like half of publicly traded U.S. companies are registered in Delaware so it's likely easier to find people to handle the paperwork.
[a suite of modular, self-contained, fully automated, climate controlled units for distributed production of energy.]
A climate controlled unit for the production of energy must mean solar panels. Another group of companies where it's hard to find a legitimate one.
Agree with posts above, it's probably money laundering, or some other fraudulent or near fraudulent activity.
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