Toward the end of March, the inevitable happened. Bitmain wasn’t able to make good on its planned initial public offering (IPO) on the Hong Kong Stock Exchange and the whole process died. The cryptocurrency mining equipment manufacturer has been struggling for more than a year, unable to produce the results it expected amid a crypto mining market that hasn’t grown as the company expected, and following a few poor business decisions. After announcing its intention of going public, Bitmain received some serious investment funds and the failed IPO has some investors banning together to sue the company.
According to a regular Bitmain Twitter critic, BTCKING555, a group of investors is putting together a class-action lawsuit against Bitmain. The suit is to be submitted in Hong Kong and looks to recover investments that were made in view of the pending IPO.
BTCKING555 laid into Bitmain and, in particular, its former CEO Jihan Wu in a series of tweets. He began by stating, “… [T]here are now tons of pissed of Asian investors that were duped by Jihan to invest during summer at $12 – $14 [billion] with a promise of IPO at minimum $18 [billion]. Now many understand this is mirage and Jihan deceived them on numbers and outlook. His reputation is shit!”
He went on to assert, “… [A]lready in august I warned many investors and prevented them from investing. Those that did not listen, good luck recovering your moneys. I hear there is class action in works in Hong Kong.”
Bitmain attracted around $700 million last summer, according to BTCKING555, which helped the company from going under. The subsequent announcement of the IPO saw the company receive a financing deal that boosted Bitmain’s value to around $15 billion, but the failure of the company to move forward with the IPO completely negates any previous valuation.
Most in the crypto community weren’t surprised that Bitmain didn’t move forward with the IPO. The company has repeatedly overextended itself and has never had the type of leadership in place that could develop a publicly traded company. Its financial filings in conjunction with the IPO were full of errors and misstatements, and many believe that it never intended to initiate the public launch—it only wanted the publicity and the investments.
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