SEC charges two for illegal sale of blockchain stock

July 04, 2018
Chris Wheal

US Securities and Exchange Commission.

The SEC halted a sell-off in shares of UBI Blockchain Internet: Shutterstock.

The US Securities and Exchange Commission (SEC) has charged two men with selling stock illegally. The Nevada-based duo allegedly made a profit of around $1.4 million by offloading restricted shares in a blockchain-related company after a sudden price spike last December.

In a press release on its website, the SEC reports that TJ Jesky and his law firm’s business affairs manager Mark F. DeStefano sold shares in UBI Blockchain Internet Ltd over a 10-day period from December 26, 2017. The selloff was halted when the SEC suspended trading in the company following “unusual and unexplained market activity.”

A statement issued by the chief of the SEC’s cyber unit, Robert A. Cohen read: “This case is a prime example of why the SEC has warned retail investors to be cautious before buying stock in companies that suddenly claim to have a blockchain business.

“This case involved both a trading suspension and people holding restricted shares who attempted to profit from the dramatic price increase with illegal stock sales that violated the registration statement.”

Price spike

The SEC alleges that Jesky and DeStefano received 72,000 restricted shares in UBI Blockchain last October. At the time, it was established that they were permitted to sell this stock at a fixed rate of $3.70 per share. However, the pair are said to have illegally offloaded their shares at a much higher price of between $21.12 and $48.40 after an unusual spike in the price of the company’s shares.

According to the SEC statement, Jesky and Stefano have agreed to return $1.4 million of the proceeds and pay a further $188,682 in penalties. In addition to the financial reparations, the pair will also be subject to permanent injunctions.

Post written by Chris Wheal
Chris Wheal is editor of OpenLedger's news and features service. An award-wining business journalists himself, he runs a team of freelance journalists from across the UK and north America.

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