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Canaan, a Bitcoin hardware manufacturer, has recently been hit with a securities lawsuit. The lawsuit was filed within US Court on the 4th of March, particularly the District Court of Oregan. One of Canaan’s own investors is suing Canaan for violating the US securities laws. The Chinese manufacturer is accused of misleading its investors within the lawsuit, particularly about its operations and financial status during its Initial Public Offering (IPO) filing with the US Securities and Exchange Commission (SEC) that occurred last November.
Intentionally Withholding Connections
Phillippe Lemieux, the Plaintiff in question, claims that Canaan had intentionally labeled a purchase agreement worth $150 million with Hangzhou Granshores Weichaeng Technology as a “strategic cooperation.” This was false, due to the fact that the chairman of that company owns 9.7% of shares within Canaan itself.
The complaint further accuses Canaan of removing its distributors from the company website prior to the IPO, as well as intentionally misrepresenting clients that were not involved within the Bitcoin mining industry itself.
Share Price Reflects Opinions
Canaan’s IPO has seen some less-than-exemplary results. The company’s initial listing price has dropped almost 50% from the initial $9 asked back in November of last year. The company quite briefly reached $8 on the 12th of February this year but had subsequently plummeted after that.
Lemieux will be represented through the Rosen Law Firm. On the 3rd of March, 2020, they posted an announcement that requested for all investors affected by Canaan’s illicit actions, to join them in their class action to try and gain compensation.
A Little History
Canaan itself is a company that specializes in the manufacturing of ASIC microprocessors and blockchain service, specifically for the use of Bitcoin mining. After launching its IPO back in November of 2019, February 2020 saw an anonymous investment analyst, going by the moniker Marcus Aurelius, publish a short report that was simply labeled “Canaan Fodder.”
Witty wordplay aside, the report claimed that Canaan had several undisclosed related-party transactions. Ones that had no economic substance behind it, and seemed to be more for personal gain than anything else.
While illegal companies are a dime a dozen, especially within the crypto industry, it’s rare to see a company that achieves sustainable economic success do something of this caliber. With any luck, all involved investors will get their money back, and the matter as a whole can be put to rest.
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