Investors Sue Bitcoin Mining Giant Canaan; Shares Crashed 48% in 3 Months
A securities class action lawsuit has already been filed against the second-largest producer of Bitcoin (BTC) mining equipment, China-based Canaan (CAN). Meanwhile, the price of its shares dropped by almost 50% since the trading begun in November.
In their press release, investor rights law firm Rosen Law Firm says that they filed the lawsuit on behalf of purchasers of the securities of Canaan during their initial public offering (IPO) held in November 2019. Canaan investors stated that they were misled, and once the factual company details entered the market, they suffered damages, which they now want recovered under the federal securities laws
The lawsuit claims that Canaan made false and/or misleading statements, failing to disclose that:
- the alleged “strategic cooperation” was actually a transaction with a related party;
- Canaan was in the worse financial situation than reported;
- Canaan had removed numerous distributors - including small or suspicious businesses - from its website just before the IPO;
- several of their largest Chinese clients were not in the Bitcoin mining industry and would likely not be repeat customers.
The firm is calling the investors to join the class action if they want to do so, while the lead plaintiff is yet to be chosen.
We have contacted Canaan and Rosen Law Firm for comment and will update the article should they reply.
Canaan has been struggling since the whole IPO story started, despite their optimistic views. The company completed its IPO on November 21, raising USD 90 million - less than the estimated USD 100 million, but also four times less than it had planned in October. Its shares started trading on the Nasdaq exchange, making it the first pure-play public equity in the mining industry, but the price saw a major drop in the first hours of trading.
More than three months since the debut, Canaan's shares dropped to USD 4.66 yesterday.
Meanwhile, the lawsuit could potentially hurt Canaan's dealing with its partners, and some are directing these partners' attention to the current developments, such as the account below. Just this February, cooperation between blockchain solutions and datacenter provider Northern Data AG and Canaan was announced, with the two working together in the areas of blockchain, artificial intelligence, and data center operations.
Hey @NorthernDataAG are you aware that your newly announced Chinese Strategic Partner @canaanio is under massive class action lawsuits in USA for shady business practices and non disclosures during the @Nasdaq IPO? https://t.co/n3R0FEtaZc— BTCKING555 (@btcking555) March 5, 2020