ShipChain

About ShipChain

ShipChain, Inc. was a logistics technology company established in 2017 by CEO John Monarch. The firm aimed to modernize the shipping and logistics industry by developing a unified and transparent tracking and management platform built on Ethereum blockchain technology. Monarch, with a background in Physics and Computer Science from Clemson University, also co-founded and served as CEO for Direct Outbound, a fulfillment center, bringing relevant industry experience to the venture.

The company's business model was centered on a blockchain-based platform designed to address inefficiencies in the multi-trillion-dollar logistics sector. This platform intended to provide a "track and trace" system, creating a transparent and immutable ledger for all parties in the supply chain. It sought to replace the need for brokers by allowing carriers and shippers to connect directly through smart contracts, which would hold payments in escrow until delivery conditions were met. The platform's services were aimed at a range of clients, from small businesses to large enterprises, offering features like a web-based booking platform and custom development. Revenue was intended to be generated through the use of its proprietary SHIP token, which was required to access the platform for booking freight and tracking shipments.

ShipChain's core product was a digital platform that unified shipment tracking using the Ethereum blockchain and a proprietary side-chain for individual tracking points. The ecosystem included components such as a hardware gateway and a REST API to interface with the public blockchain. The key feature was the SHIP token, an ERC-20 standard token on the Ethereum network. This token was integral to the platform's operation, used for settling transactions, and incentivizing carriers for timely and safe deliveries.

The company's primary method of raising capital was through an Initial Coin Offering (ICO) conducted from late 2017 to early 2018, which raised approximately $27.6 million. However, this fundraising method led to significant legal challenges. In May 2018, the South Carolina Attorney General's Office issued a cease-and-desist order, alleging the sale of SHIP tokens constituted an unregistered securities offering. Ultimately, the U.S. Securities and Exchange Commission (SEC) reached the same conclusion. The SEC determined that the ICO was an unregistered sale of securities because investors had a reasonable expectation of profit based on ShipChain's efforts. In December 2020, ShipChain settled with the SEC, agreeing to a $2.05 million civil penalty and a cease-and-desist order. This penalty represented a substantial portion of the company's assets, leading ShipChain to cease all operations. The settlement established a Fair Fund to compensate investors who had purchased the SHIP tokens.