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HomeCryptoCurrencyLawsuits filed against mining company Ebang for allegedly fraudulent short sells

Lawsuits filed against mining company Ebang for allegedly fraudulent short sells

Several law firms encourage investors in shares of mining equipment maker Ebang International Holdings (“EBON” on Nasdaq) who have suffered significant losses in recent days to initiate legal action. They denounce an alleged misappropriation of funds through short sells , in addition to possible security flaws on the part of the company.

Hanges Berman, Ademi LLP, Pomerantz LLP and Johnson Fistel are the firms that promote the investigation and incite the apparently injured to sue. Law firms are analyzing possible fraudulent actions on the part of the Chinese company.

According to a report published by Hindenburg Research on April 6, 2021, the year Last year Ebang raised approximately USD 374 million from its investors in 4 share offerings. Such funds were to be used to “expand operations” of the company in cryptocurrency mining, exchange platforms and other corporate activities, as reported by the firm itself.

However, it was investigates the possibility that Ebang used its clients’ money for “unclear” deals with companies related to its CEO , Hu Dong. In addition, there is doubt about the veracity of the figures regarding the sale of mining equipment, which would be much lower than reported and would have declined sharply since 2019, which would place Ebang far from competitors such as Bitmain.

According to Hindenburg, which presents itself as a company «dedicated to forensic financial auditing», Ebang would have allocated USD 103 million to the purchase of bonds of its insurance company, which, they allege, has several allegations of fraud in the past. Meanwhile, another USD 21 million would have been paid to a relative of Dong as payment of loans for short positions or short sells .

The same publication also details that Ebang’s attempts to list The Hong Kong Stock Exchange failed as the media exposed its dealings with Yindou, a Chinese P2P lending platform that was accused of defrauding more than 20,000 investors in 2018, with losses of up to $ 655 million that « disappeared. ”

The Ebang’s response to the allegations

In a statement published on its official site, the Chinese manufacturer rejected the versions against it . “We believe that the Hindenburg report contains many errors, unfounded speculations and inaccurate interpretations of the events,” they said.

They also assured that the company’s board of directors, together with the committee of audits, will analyze “allegations and erroneous information” and will take the necessary actions to protect the interests of its shareholders.

The Ebang exchange, also suspected

Recently, CriptoNoticias reported on the launch of Ebonex.io, the Ebang exchange. Not only did the announcement lead to a 5% drop in the company’s share value, it is also related to “the failure of the mining business” in the Hindenburg report.

The same source indicates that, despite its recent presentation, Ebonex.io is presented as one of the leading exchanges in the market, although its data cannot be found in the main measurement sites such as CoinMarketCap or CoinGecko. For that reason, they speculate, they could be “fictitious volumes”.

Impact on Ebang’s shares

As of April 4, a couple of days before the Hindenburg release, the shares Ebang on Nasdaq reached $ 7.50. However, after knowing the accusations, the figure was devalued to USD 5.00 on April 6.

The value of Ebang shares on Nasdaq reflect the difficult week for the company. Source: Yahoo! Finance

On June 26, 2020, when EBON’s direct listing began On the stock market, the company raised about USD 101 million.

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Sandra Loyd
Sandra Loyd
Sandra is the Reporter working for World Weekly News. She loves to learn about the latest news from all around the world and share it with our readers.

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