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Saturday, April 10, 2021

Ebang rebuts Bitcoin’s ‘China Hustle’ claims as share price drops 20%

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Chinese mining company Bitcoin (BTC) Ebang’s share price continues to decline, as the company refutes claims in a report by Hindenburg Research that it was stealing money from U.S. investors.

The Hindenburg Research report, released on April 6, describes Ebang as “simply the latest chapter of the ‘China Hustle’ disguised as a Bitcoin mining game. The report alleges that Ebang raised hundreds of millions of dollars through public offerings in the United States under the guise of operating as a Bitcoin mining company.

The money collected during the rounds of financing would have been channeled out of the company in “a series of opaque agreements with insiders and dubious counterparties”. Ebang describes itself as a “major producer of Bitcoin mining machines,” but according to Hindenburg’s research, the company hasn’t released a new product since 2019 and its sales have declined steadily since.

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Ebang, along with Canaan Creative, is one of only two Chinese Bitcoin mining companies listed on the US stock markets. The NASDAQ: EBON share price has fallen 20% since the start of the week. After trading at $ 6.35 on Monday, the stock price had fallen to $ 5.00 at Tuesday’s close, which equates to losses of 21%. The stock has since rebounded to $ 5.03, leaving weekly losses above 20%.

The Hindenburg report alleges that Ebang saw the handwriting on the wall of his mining drilling company, which would produce substandard machinery compared to local competitors. The company then reportedly morphed into a cryptocurrency exchange, dubbed Ebonex. The initial announcement apparently increased EBON’s market cap by $ 922 million.

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Researchers at Hindenburg say they discovered that the Ebonex exchange was purchased from a crypto exchange service provider called Blue Helix, which offers “out of the box” exchanges with no cash up front.

After launching just a few months ago, Ebonex miraculously skyrocketed to some of the highest trading volumes in the world, despite the lack of an online presence. Its supposedly fictitious numbers are not being recorded on crypto market monitoring websites like CoinMarketCap or CoinGecko, and Hindenburg calls the whole affair “yet another uplifting tale for inexperienced retail investors.”

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The report prompted an official response from Ebang International Holdings Inc, which claimed the review was full of speculation and unsubstantiated allegations. The announcement said Ebang would investigate Hindenburg’s claims and take action to protect its investors.

“Based on the review by the company’s management team, we believe the Hindenburg report contains many errors, unsubstantiated speculation and inaccurate interpretations of events,” the announcement said.

He added: “The Board, together with its Audit Committee, intends to further investigate and investigate the allegations and misinformation contained therein and will take all necessary and appropriate action that may be required. necessary to protect the interests of its shareholders. ”