Bitmain Provided False and Misleading Document to Investors Ahead Of Its IPO

Bitmain Technologies Ambiguous Documents Misleading Investors Ahead Of Its IPO

Parties solicited to spend in the pre-initial public offering (IPO) funding around for Bitmain Technologies, Ltd., the top maker of cryptocurrency mining software and hardware, obtained pitch decks suggesting the firm had secured financial backing from Digital Sky Technologies Global and GIC Private Limited, an investigation by CoinDesk has uncovered.

The question is who place those misrepresentations into the pitch decks. BMI was unable to verify the authenticity of the three versions reviewed and identified outside of individuals who received them since Bitmain hasn’t responded to multiple inquiries regarding their production and dissemination, although most of them published the firm name and a confidentiality warning on each slide, and two versions prescribed deadlines and methods to bank wiring instructions.

One variant of this pitch decks, initially composed in Chinese and translated into English, described Bitmain as having”recently completed a $400 million Series B round of funding from Sequoia Capital, DST and GIC, with a pre-investment valuation of $12 billion” and was steered by someone claiming to have access to this deal and knowledge that Bitmain created the pitch deck without offering proof, says a source who came into possession of the copy.

The other two variations, worded differently and formatted in English, said Bitmain had”raised an additional $400 million in a $12 billion evaluation from investors like Sequoia China, GIC and DST at a Series B round” and circulated in people social networking talks and personal email exchanges where a single copy was procured by joining onto the pre-IPO around, according to another source that maintains that the pitch deck originated in Bitmain.

CoinDesk learned about the inaccuracy of the statements three times following reporting Bitmain’s Series B investors on August 10. Josh Lindsfor, a DST Global managing director, affirmed Wootten’s statement in a different email weeks afterwards, refuting a DST International investment over Bitmain’s funding rounds entirely.

The next month, a GIC spokesperson issued the exact same refusal when reached for comment. Other investors listed in the pitch decks besides DST International, the Hong Kong-headquartered investment arm of billionaire Yuri Milner’s Russia-based Mail.Ru Group web company, and GIC, among many sovereign wealth funds managed by the Singaporean government, were found to be valid.

Possible legal implications

BMI’s analysis comes after a report revealed SoftBank Group and Tencent Holdings failed to invest in Bitmain, contradicting previous media things that’d republished information saying differently from”IPO Zao ZhiDao,” that a WeChat news socket popular in China for masking IPOs throughout the Asian continent.

Many listeners at the cryptocurrency community accused Bitmain of dispersing the false claims after the report, but the sourcing for the guide was uncertain.

On the other hand, the connection between Bitmain and these hottest misrepresentations around DST Global and GIC, while inconclusive, seems less tenuous sufficient to induce a critical response from the origin who talked with BMI about getting the English toss deck and investing at the pre-IPO round.

The source, who asserts that a Bitmain investor provided the pitch deck following introducing and co-signing the deal, communicated feeling adequately”unsettled” from the debunked assertions to look at taking legal actions against Bitmain, presuming the asserts to be accurate once the agreement was being finalized. Whether the origin is likely to make good on this reaction remains to be seen, however.

Whatever the situation, if Bitmain is found to have been in charge of advertising that the fictitious claims in the pitch decks, then the legal consequences could be important. In Hong Kong, in which Bitmain is physically situated, a business which makes false statements”for the purpose of inducing the individual to enter into an arrangement” may face legal liability for committing”deceptive or reckless misrepresentation,” Ashurst LLP legal counsel Hoi Tok Leung stated in an email.

Broadly , the S.E.C., or the identical regulatory body from the U.S., can be”inclined to pursue anyone that they think is seeking to raise funding from U.S. investors” on jurisdictional grounds unless”management had a reasonable good faith reason to believe the data to be authentic at the moment,” noted Timothy Peterson, a Murphy & McGonigle fiscal tech law spouse and former S.E.C. Division of Enforcement senior adviser, in another email.

However not every investor has come in touch with the pitch decks comprising the untrue claims, restricting the size of any possible legal recourse against Bitmain. A managing director in a Hong Kong venture capital company that engaged in the pre-IPO round of financing that talked with BMI on condition of anonymity recalled a pitch deck wasn’t exchanged and DST Global and GIC weren’t brought up at any given stage in financing negotiations.

The investment opportunity was rather presented in a pitch meeting arranged by a set of intermediary investors. “There were a couple of asset managers that left a majority [financing channel in] the round and several investors moved ,” the managing director said.

Going public

Mainland Chinese natives Micree Zhan and CEO Jihan Wu co-founded Bitmain in 2013 to construct cryptocurrency mining rigs allowed by application-specific integrated circuit (ASIC) chips. The aim was to out-compete present mining apparatus that performed complicated, energy-intensive mathematical computations to decode cryptographic codes and recover bitcoin from a dispersed electronic ledger called a blockchain as quickly as possible.

Together with the burgeoning cryptocurrency sector Since that time, Bitmain has witnessed flourishing business diversifying into other cryptocurrencies and setting apart provides of mining rigs in the beginning of production to be used during the business’s in-house mining farms from the U.S., China, Europe and the Middle East.

Based on investor records, in the previous year alone, Bitmain raked in billions of dollars from sales of mining equipment and direction of mining farms and pools, pouring huge sums of the money to robotics and artificial intelligence growth and other businesses focusing on blockchain technology.

The explosive expansion has been reflected at the IPO list Bitmain registered in September for people trading in the Hong Kong Stock Exchange at the start of the next year, BMI formerly reported. The IPO’s market capitalization was valued at somewhere between $40 to $50 billion, which makes it among the fastest-growing cryptocurrency businesses and startup unicorns.

Now, however, in light of those toss decks, Bitmain might be put in not just murky monetary waters with all the current market slump leading to surplus product stocks, but also legal danger with its own plans to go mainstream since the cryptocurrency industry continues to fend off an overwhelmingly unfavorable public perception of the industry rife with authenticity problems.

Before that, in March, the S.E.C. allegedly subpoenaed 80-something people and companies to get questionable actions connected with initial coin offerings (ICOs), a sort of crowdfunding which transacts in cryptocurrency and cryptocurrency-like fiscal resources.

Dozens of lawsuits and arrests are recorded globally in link to the cryptocurrency vehicles in the middle of those investigations, with regions of interests which have the veracity of these approaches’ advertising statements and promotional materials.

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