The share price of Chinese mining company Bitcoin Ebang continues to decline as the company denied allegations in a Hindenburg Research report that it was stealing money from US investors.
The Hindenburg Research Report released on Tuesday describes Ebang as “the latest chapter in China’s hustle and bustle disguised as the Bitcoin mining operation.” The report alleges that Ebang raised hundreds of millions of dollars through a public offering in the US under the guise of a Bitcoin (BTC) mining company.
The funds raised in the funding rounds are alleged to have been withdrawn by the company as part of a “series of vague agreements with insiders and suspicious counterparties”. Ebang describes itself as the “leading provider of bitcoin mining”, but according to a study by Hindenburg, the company has not released a new product since 2019 and sales have declined steadily since then.
Ebang, along with Canaan Creative, is one of only two Chinese bitcoin mining companies listed on the US stock market. Nasdaq share price: EBON stock is down 20% since the start of the week. After trading at $ 6.35 on Monday, the share price fell to $ 5 by the end of Tuesday, which is a 21% decline. Since then, the stock has recovered to $ 5.03, raising its weekly losses to more than 20%.
The Hindenburg report claims that Ibang saw an inscription on the wall around his mining business, which allegedly produced poor-quality machinery compared to local competitors. The company is then said to have switched to a cryptocurrency exchange called Ebonex. The first announcement appears to boost EBON’s market value to $ 922 million.
Researchers from Hindenburg claim to have discovered that the Ebonex was purchased from a crypto-terminal provider called Blue Helix, which offers “custom” exchanges without prepayment.
Since its launch just a few months ago, Ebonex has miraculously grown to set record trading volumes in the world, despite not being online at all. His alleged fake numbers have not been reported on cryptocurrency market sites like CoinMarketCap or CoinGecko, and Hindenburg describes the entire case as “another warning story for inexperienced retail investors”.
The report sought an official response from Ebang International Holdings Inc, which claimed the review was riddled with speculation and unfounded allegations. The announcement said Epang would investigate Hindenburg’s allegations and take steps to protect investors.
“Based on the analysis conducted by the company’s management, we believe that the Hindenburg report contains many errors, unconfirmed assumptions and inaccurate explanations of the incidents,” she added.
She added, “The Board of Directors and the Audit Committee intend to study the allegations and misinformation contained therein, investigate them, and take necessary and necessary measures to protect the interests of shareholders.”