What happened

Shares of Seven Stars Cloud Group (NASDAQ:SSC) slumped on Monday after the Chinese blockchain company disclosed in an SEC filing that existing shareholders may sell as many as 37.7 million shares. The stock was down about 11.4% at 11:45 a.m. EDT.

So what

Roughly 30 different entities may sell some or all of their respective stakes in Seven Stars Cloud Group, either through public markets or through private transactions. Up to 37.7 million shares can be sold in aggregate, with the company receiving no proceeds from the sales. At the end of the second quarter, Seven Stars' diluted share count was about 71.8 million.

A coin with a B on the face against a background of a chart.

Image source: Getty Images.

The proposed maximum offering price is $2.955 per share, although that number could change. About $111 million would be reaped from the sales if all eligible shares are sold. That compares to a market capitalization of around $350 million for Seven Stars.

With the potential for a significant portion of Seven Stars' shares to be unloaded by major shareholders, the market is erasing some of the stock's recent gains.

Now what

Seven Stars' stock price has been subject to wild swings over the past year. It surged in December along with cryptocurrency prices, only to plummet in the first two months of the year. The stock then regained that lost ground last week when the company signed an exclusive deal with China's largest electric-bus operator.

Big shareholders may be looking to take advantage of the most recent surge to sell out at elevated prices. At least some smaller investors are following suit, pushing down the stock price.