Mining hardware giant Canaan has been accused of misrepresenting its potential revenues for 2020 to investors, after close links to one of its purported clients were established. Analyst Marcus Aurelius Value have said that the Nasdaq listed mining company has deliberately used a deal with a related company it knows is unable to meet the purchase price in order to inflate revenue numbers for the year. The client partnership in question, worth a purchase price of $150 million, is expected not to go ahead, despite the companies being related, and the allegations from Marcus Aurelius Value suggest Canaan knew this at the time of announcing the deal. A report from the analyst also found Canaan’s AvalonMiners to be uncompetitive, something it attributes to the significantly lower R&D budget at Canaan versus its competitors. As a result of its findings, the analyst has moved into short positions on Canaan, considering the company’s stock “uninvestable” on its current trajectory. The argument against Canaan stems from a transaction in the run up to its initial public offering (IPO) last November, and what the analysts suggested was a “highly unusual” transaction. Canaan secured a “strategic partnership” with Hong Kong company Grandshores, which would see the firm purchase $150 million in mining equipment. However, the report raised concerns about how Grandshores could feasibly have funded this purchase, when the company had just $16 million in the bank and a market cap of $50 million. Further suspicions are raised in the report over the size of the transaction, which would have accounted for the bulk of the company’s $177 million annual revenue, coming just weeks before Canaan was due to IPO. Both firms also happen to be connected through Yao Yongjie, chairman of Grandshores and 9.7% shareholder in Canaan. The suggestion of irregularities is consistent with analyst reports around previous Canaan IPO attempts. As a result, the report concludes foul play at Canaan ahead of its initial offering: We therefore wonder if the giant Grandshores letter of intent, which we view as largely bogus, was used by CAN as a device to hype its financial prospects to investors.