The SEC is closely monitoring developments in the world of cryptocurrency and ICOs. Two individuals in Nevada have agreed to settle an ongoing lawsuit over illegally selling stocks. Those stocks belong to a blockchain-oriented company, and both men cashed out $1.4 million thanks to some trickery.

The name UBI Blockchain Internet Ltd. will ring a bell for some cryptocurrency and blockchain enthusiasts. This firm became hot news when the SEC launched an investigation into its business affairs manager and one of its legal representatives. Mark F. DeStefano and T.J. Jesky sold nearly $1.4 million worth of company stock in late 2017 and early 2018. Although that is not illegal, the way these individuals went about things raised a lot of questions.

Both individuals obtained 72,000 restricted company shares in October. They could have sold that stock at a price of $3.70 per unit, which would have netted them $266,400. However, both individuals decided to sell their restricted stock at a much higher price. Units were sold at prices ranging from $21.12 to $48.40. As a result, they essentially quintupled their original holdings by piggybacking on the company’s increase in popularity.

That increase in popularity occurred because of the company’s alleged involvement in blockchain technology. Late 2017 and early 2018 had all of the telltale signs of a market bubble for blockchain firms, and a fair few companies paid the price for it. Some firms even changed their names to include “blockchain” as a way to prop up their stock prices. It is this activity which the SEC has been cracking down on for months.

Shortly after UBI Blockchain Internet’s shares began to surge to those levels, the SEC intervened. Trading of company stock was halted until January 22, and an official investigation began. It did not take long to figure out how these two company staffers had benefited from the rise in the stock price and liquidated their restricted stocks in the process.

UBI Blockchain Internet’s shares have plummeted to $2.50 as of today, as January’s market surge – during which the price reached $115 – was not sustainable. In fact, the one-year return of these stocks is -76.08%, further indicating that some manipulation took place earlier this year. It is possible this is also tied to the ongoing cryptocurrency market declines, even though the company’s quarterly income statements are not looking all that healthy either.

For Jesky and DeStefano, their settlement involves paying back $1.14 million in profits and paying $188,682 in penalties. Both men have refused to admit or deny the stock-related charges, but their settlement seems to indicate the matter will be put to rest without anyone enriching themselves in the process. Investigations like these by the SEC are direly needed to bring more legitimacy to the blockchain and cryptocurrency industry.

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