Critic Says Investors Can Sue Bitmain
According to BTCKING555, a critic of the cryptocurrency mining giant Bitmain, a group of investors are preparing to sue the company. In a Twitter post on March 26, the critic stated that this group was getting ready to file a class action lawsuit against Bitmain in Hong Kong in a bid to recover their investments after the crypto mining giant’s IPO (Initial Public Offering) application expired.
Details of the Post
BTCKING555 wrote in his post that he had warned many investors and had prevented some from investing in the crypto mining company. However, those that did not listen were now attempting to recover their investments.
This critic also claimed that in the summer of 2018, Bitmain raised $700 million, which saved the company from bankruptcy. Investors had been hoping that the value of their shares would rise significantly after that funding round.
BTCKING555 claimed that the co-founder of Bitmain Jihan Wu and his CFO had lied about their numbers as well as the names of their investors, such as Tencent and Softbank, so that they could raise the funds they needed.
Controversies Around Bitmain’s IPO
These remarks follow the news that Bitmain’s IPO application to have its shares listed on the Hong Kong Stock Exchange (HKEX) had finally expired.
According to the rules at the HKEX, if an application reaches the end of its validity period of 6 months with getting confirmed reports of a Committee hearing, then the filing expires. In a blog post, the company claimed that it had purposely allowed its IPO application to expire.
Bitmain had first confirmed that it was applying for an IPO listing in summer 2018. Later that summer, reports emerged that the crypto mining giant had sealed an IPO financing deal which took its valuation up to $15 billion.
The company claimed that both Chinese technology giant Tencent as well as the Japanese investment giant Softbank were a part of this deal. However, Softbank publicly denied its involvement with Bitmain and Tencent refused to either confirm or deny the deal. This led to other investors distancing themselves from the crypto-mining company.
Finally, when the company did file for its IPO listing, concerns were raised about Bitmain’s poor quarterly results. To try and cover up these results, the company combined its revenues from the first and second quarters. However, the math was done, and it was reported that the crypto-mining equipment maker lost as much as $400 million in the second quarter of last year.