ShipChain (SHIP) dropped by almost 50% following news that the blockchain startup received a cease and desist order from the South Carolina Attorney General’s Office.
While ShipChain positioned itself as a legally registered, Ethereum-powered logistics platform, authorities have outlined clear accusations that the firm is not registered with the Attorney General Office’s Securities Division as a trader. Thus, the securities offered and sold by the company are in violation of the South Carolina Uniform Securities Act of 2005.
The startup may request a hearing within 30 days, where company representatives will have to prove why the sale of the tokens did not constitute a “distribution of unregistered securities”. Otherwise, ShipChain will be prohibited from conducting business transactions and "participating in any aspect of the securities industry in or out of South Carolina."
In its Twitter account ShipChain stated that the company's lawyers intend to respond to the regulator's demand as soon as possible.
We are aware of the letter that was sent to us by the Attorney General of South Carolina. Rest assured that our lawyers are working on responding as fast as they can. We will keep you updated as soon as we have more information.
— ShipChain (@ShipChain) May 22, 2018
The order received mixed reactions on social media. One Reddit user blamed it on the growing conflict between “old industries and the new middleman-free business world.”
By Nadya Astam