Shipchain

Key Points

• ShipChain, a blockchain-based logistics startup, is accused of fraudulently using DMCA takedown notices to suppress critical reviews and negative news, potentially involving impersonation, fraud, and perjury.

• The company raised $27.6 million through an unregistered Initial Coin Offering (ICO) in 2017, leading to a $2.05 million settlement with the SEC in 2020, after which it ceased operations.

• Allegations against CEO John Monarch include regulatory violations, mismanagement, unethical practices, and involvement in a lawsuit for blackmail and smear campaigns.

• The use of fake DMCA notices, possibly through rogue reputation management agencies, suggests a pattern of censorship to manipulate public perception.

• ShipChain’s SHIP token is still listed on some crypto exchanges, but its value is volatile, and the company’s shutdown raises concerns about investor risks.

Overview

ShipChain was a logistics and supply chain management company founded in 2017 by John Monarch, headquartered in South Carolina, USA. It aimed to leverage blockchain technology, primarily Ethereum, to create a transparent, decentralized platform for tracking shipments and managing logistics. The company launched its proprietary SHIP token through an ICO in late 2017, raising $27.6 million by selling over 145 million tokens. ShipChain’s platform, including its Mainnet launched in 2020, allowed users to transact and encouraged developers to build on its infrastructure. Despite early progress, regulatory scrutiny and financial challenges led to the company’s closure in December 2020 following a settlement with the U.S. Securities and Exchange Commission (SEC).

Allegations and Concerns

• Fraudulent DMCA Takedown Notices: ShipChain is accused of submitting fake copyright takedown notices to remove critical reviews and adverse news from Google search results. These actions allegedly involve impersonation, fraud, and perjury, potentially orchestrated by rogue online reputation management agencies acting on ShipChain’s behalf. The notices used a “back-dated article” technique, creating fake originals to claim copyright over legitimate content.

• Unregistered Securities Sale: The SEC determined that ShipChain’s 2017 ICO was an unregistered securities sale, violating federal regulations. The company settled by paying $2.05 million, which depleted its resources, leading to its shutdown.

• CEO Controversies: John Monarch, ShipChain’s CEO, faces allegations of regulatory violations, mismanagement, and unethical practices. A lawsuit accuses him of involvement in blackmail and smear campaigns, raising concerns about his leadership and ethics.

• Censorship Network: Investigations suggest ShipChain may be part of a broader censorship network funded by criminal enterprises or oligarchs to suppress public information and bypass anti-money laundering (AML) checks.

• South Carolina Cease-and-Desist: In 2018, South Carolina issued a cease-and-desist order against ShipChain for the unregistered sale of SHIP tokens, though this was later vacated after an inquiry.

Customer Feedback

Customer feedback on ShipChain is sparse due to its B2B focus and eventual closure. Available sentiments from public sources, primarily investors and industry observers, are mixed:

• Positive Feedback: Some early investors praised ShipChain’s vision for revolutionizing logistics with blockchain, noting the Mainnet launch as a technical milestone. A 2020 blog post quoted the company saying, “Other developers are welcome and encouraged to build on top of ShipChain, further enhancing its utility for end users.”

• Negative Feedback: Investors and stakeholders expressed alarm over the SEC settlement and Monarch’s alleged misconduct. An anonymous investor commented, “As an investor, hearing about Shipchain’s CEO being involved in a lawsuit for blackmail and smear campaigns is alarming. If these allegations hold, it shows a complete lack of professionalism and ethics.” Another stated, “Monarch = walking red flag,” reflecting distrust in leadership.

• Lack of Consumer Reviews: No direct consumer reviews from logistics clients are publicly available, likely due to ShipChain’s enterprise focus and short operational lifespan.

Risk Considerations

• Financial Risks: The SHIP token’s volatility (valued at $0.000405 as of recent data) and ShipChain’s closure pose significant risks for investors holding tokens. The lack of operational revenue and depleted funds post-SEC settlement eliminate prospects for recovery.

• Reputational Risks: Allegations of censorship, fraud, and unethical leadership severely damage ShipChain’s and Monarch’s credibility. These issues could impact Monarch’s future ventures and deter partnerships or investments.

• Legal Risks: Potential lawsuits related to fraudulent DMCA notices, if proven, could result in criminal charges for impersonation, fraud, or perjury. Monarch’s alleged involvement in blackmail schemes may lead to further legal scrutiny.

• Regulatory Risks: ShipChain’s history of regulatory violations, including the SEC settlement and South Carolina’s cease-and-desist, highlights ongoing compliance challenges for blockchain-based firms.

Business Relations and Associations

• Key Figure: John Monarch, CEO and founder, is central to ShipChain’s operations and controversies. His leadership has been criticized for mismanagement and unethical conduct.

• Partnerships: ShipChain collaborated with Ethereum for its blockchain infrastructure and aimed to attract developers to its Mainnet. No specific corporate partnerships with logistics firms are well-documented.

• Reputation Management Agencies: Investigations suggest ShipChain may have engaged rogue “Online Reputation Management” agencies to execute DMCA takedown schemes, though specific firms are not named.

• SEC and Regulatory Bodies: ShipChain’s interactions with the SEC and South Carolina Securities Commissioner shaped its legal trajectory, culminating in its closure.

Legal and Financial Concerns

• SEC Settlement (2020): ShipChain settled with the SEC for $2.05 million over its unregistered ICO, which raised $27.6 million. The settlement required transferring remaining SHIP tokens to a Fund Administrator and notifying exchanges to halt trading. The financial burden led to the company’s closure.

• South Carolina Cease-and-Desist (2018): The state issued a cease-and-desist order over the unregistered SHIP token sale, later vacated in July 2018 after an inquiry.

• Lawsuit Against John Monarch: Monarch is named in a lawsuit alleging blackmail and smear campaigns, though details are limited. This raises concerns about his professional conduct.

• No Bankruptcy Records: No formal bankruptcy filings are noted, but ShipChain’s announcement of insufficient resources post-SEC settlement effectively ended operations.

• DMCA Fraud Allegations: If substantiated, fraudulent DMCA notices could lead to legal action for perjury or fraud, potentially implicating ShipChain or its agents.

Risk Assessment Table

Expert Opinion

ShipChain’s case exemplifies the challenges faced by blockchain startups navigating regulatory landscapes and public perception. Its innovative approach to logistics via blockchain showed promise, particularly with the Mainnet launch, but was overshadowed by regulatory non-compliance and alleged unethical practices. The SEC settlement highlights the risks of unregistered ICOs, a common pitfall for crypto ventures in the late 2010s. More concerning are the allegations of fraudulent DMCA notices, which suggest a deliberate attempt to manipulate public information, potentially involving criminal activity. John Monarch’s leadership, marred by lawsuits and accusations of mismanagement, further erodes trust.

Pros:

• Pioneered blockchain applications in logistics, with a functional Mainnet.

• Raised significant capital, indicating early investor confidence.

• South Carolina’s vacated cease-and-desist showed some regulatory resolution.

Cons:

• Unregistered ICO led to a crippling SEC settlement and closure.

• Alleged censorship via fake DMCA notices raises serious ethical and legal concerns.

• Monarch’s controversies, including blackmail allegations, damage credibility.

• Lack of operational continuity and sparse customer feedback limit legacy.

Cautionary Advice: Investors should avoid SHIP tokens due to their volatility and the company’s defunct status. Stakeholders in blockchain ventures should prioritize regulatory compliance and transparent governance to avoid similar fates. Businesses or individuals considering partnerships with Monarch or related entities should conduct thorough due diligence, given the reputational and legal risks. Monitoring ongoing investigations into DMCA fraud is advisable, as new evidence could escalate legal consequences.

Key Citations

• FreightWaves: Details ShipChain’s SEC settlement and closure.

• CoinGeek: Reports on the SEC settlement and ICO issues.

• Investing.com: Provides SHIP token valuation and crypto market context.

• X Post by @ShipChain (July 27, 2018): Announces vacated South Carolina cease-and-desist.

• Lumen Database and Maltego: Cited for analyzing fraudulent DMCA notices