Bitmain IPO Investors Were Misled by False Information on Crypto Mining Giant’s Funding Round
Those interested in investing in Bitmain and its pre-initial public offering (IPO) funding round received false information about it. Apparently, investors received reports that the company had secure financial funds from other important companies such as Digital Sky Technologies Global and GIC Private Limited.
According to a report conducted by CoinDesk, there is no information about who decided to provide such a false information. At the same time, Bitmain did not answer questions regarding this situation.
As per the investigation, one of the first versions is related to Bitmain having completed a $400 million dollars Series B round from Sequoia Capital and a pre-investment valuation of $12 billion dollars. The information was first provided in Chinese and then translated into English.
There are also two other versions circulating according to CoinDesk. This information stated that Bitcoin raised $400 million at a $12 billion dollars valuation from Sequoia China, GIC and DST in a Series B round. This version circulated in social media and other networks.
According to CoinDesk, Jan Wootten, a representative for DST Global, explained by email that DST Global did not invest in Bitmain. Furthermore, Josh Lindsfor, DST Global managing director, has also explained that DST Global did not invest in Bitmain.
There are several individuals in the crypto community that say that Bitmain spread false claims about funding rounds. There were other reports in which they informed that other companies such as Tencent Holdings and SoftBank did not invest in Bitmain. However, IPO Zao ZhiDao, a WeChat news outlet popular in China reported that these two companies (SoftBank and Tencent) were investing in Bitmain. CoinDesk decided to contact IPO Zao ZhiDao but the author did not comment on the matter.
Bitmain could be involved in a bigger problem if the community discovers that it has been responsible for advertising false claims in the pitch decks. According to Ashurst LLP Legal Counsel Hoi Tok Leung, said that Bitmain could face legal liability for committing ‘fraudulent or reckless misrepresentation’ reports CoinDesk.
At the same time, Bitmain management could also be penalized with up to seven years in prison and very high fines. However, the decision should be taken by the Securities and Futures Commission of Hong Kong. In the United States, it is also possible for the US Securities and Exchange Commission (SEC) to pursue anyone they believe is seeking to raise capital from investors in the country with fraudulent campaigns.
Bitmain is one of the most important and recognized companies in the cryptocurrency world. In the last years, it was able to create bitcoin and crypto mining hardware and build mining farms in China and other countries. At the same time, Bitmain has important mining pools that operate in the market.
Binance was able to register billions of dollars selling mining equipment and management of mining pools. Additionally, it has also invested in robotics and artificial intelligence (AI) in order to diversify their investments.
Furthermore, in September Binance decided to go public through an IPO on the Hong Kong Stock Exchange. The IPO market capitalization was valued between $40 to $50 billion dollars. In this way, the company was one of the most valuable virtual currency companies in the market.
However, Bitmain could suffer the consequences of providing financial information that ended up being fake. And indeed, it would also have a negative impact on the overall market that has been falling since the beginning of the current year.
Regulatory agencies all over the world are starting to control the market in a much more active way. They are searching for new ways to regulate the market, protect investors and avoid companies to perform illegal and fraudulent activities.