Ebang International (NASDAQ:EBON) is down in trading today following a blistering short seller report from Hindenburg Research. That report accuses Ebang of misappropriating company funds and repeatedly lying to investors; EBON stock is down more than 13% in trading today.
Ebang is a Chinese company that sells cryptocurrency mining machines, as well as running its own cryptocurrency exchange and mining operations. The company has raised approximately $374 million from U.S. investors since EBON stock came public in June of last year.
Proceeds from those four stock offerings were supposed to go to developing business operations, but Hindenburg says its research indicates the cash flowed out of the company “through a series of opaque deals with insiders and questionable counterparties.”
Here are the big takeaways from the Hindenburg Research report on Ebang International:
- Ebang’s core business is in selling ASIC mining units to others looking to mine cryptocurrencies.
- However, the company released its final miner in May of 2019 and only delivered 6,000 total units in the first half of 2020.
- Furthermore, Hindenburg says Ebang’s cryptocurrency exchange “Ebonex,” officially launched yesterday, is reporting fictitious volumes.
- Per Hindenburg, “Ebonex volume data implies it is one of the largest spot exchanges in the world.”
- Yet its trading metrics aren’t listed on major crypto exchange trackers.
- Ebang previously purchased $103 million in bonds from its U.S. underwriter AMTD.
- That amount represents ~$11 million more than the value of the company’s IPO.
- Ebang and AMTD have a checkered past, to say the least.
- For AMTD, that past includes “fraud and self-dealing allegations,” as well as previous listings that have imploded.
- For Ebang, that past includes two lapsed Hong Kong IPOs, alleged involvement in a sales inflation scheme and the series of aforementioned stock offerings.
- Ebang International has yet to respond to the short seller report.
- EBON stock was down nearly 13% in trading today on more than two times the average trading volume (54.5 million trades on the day, compared with an average daily volume of 21.4 million trades)
On the date of publication, Vivian Medithi did not have (either directly or indirectly) any positions in the securities mentioned in this article.