Shenzhen-listed gaming app and marketplace provider Wholeasy disclosed on Dec. 9 that the Beijing police Bureau opened a criminal case against Ebang, 8BTC reported. Ebang is a manufacturer of cryptocurrency miners based in Hangzhou, China. Cailiang, a subsidiary of Wholeasy, filed the charge accusing Ebang of sales fraud.
The complainant claims that in March 2018, they agreed to purchase 100,000 Bitcoin mining units from Ebang worth 504 million Chinese yuan, or $80 million at the time. The sales agreement shows the miners sold to Cailiang was the E9+ series, for 5,000 yuan each, or $720.
Cailiang alleged it has not received any deliveries from Ebang’s Yunnan branch, but said they received a shipment of only 65,000 servers from the company’s Zhejiang branch after Ebang sent the products to a third party without giving any instructions for the delivery.
Ebang issued a statement on social media stating Cailiang filed the police report in a malicious attempt to play the victim. “Their malicious report to the police is nothing but an attempt to escalate it to a criminal case to interfere with a civil lawsuit,” Ebang said according to a report by CoinDesk.
The company said it had already filed a separate report to financial regulators in China accusing Cailiang of false disclosure on its liability as a public company. The manufacturer released a dozen pages of sales contracts and delivery receipts as supporting documents to counter Cailiang’s story.
The escalation followed a civil contract dispute case over an unpaid amount of 100 million yuan, worth approximately $15 million. The amount stems from the two parties’ original $80 million bitcoin miner sales agreement in March 2018.
Ebang sued Cailiang in April 2019, demanding the defendant to pay the outstanding overdue balance for the purchase of all 100,000 units of bitcoin miners. Cailiang insisted that it shouldn’t be liable for the remaining debts since not all of the miners were received. Cailiang maintains Ebang was not able to satisfy the delivery agreements stated in the contract. The case was adjudicated on Nov. 26 and is pending the judge’s decision.
This year, Ebang had plans to file for an initial public offering (IPO) in the United States. The recent news could significantly affect the path the potential listing will take. The plaintiffs consist of two China-based companies that trade on both Chinese stock exchanges; the Shanghai Stock Exchange (SSE) and the Shenzhen Stock Exchange (SZSE). Following the news on Friday, Wholeasy’s share price fell by eight percent on the Shenzhen Stock Exchange.
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