A couple of weeks ago, cryptocurrency mining company Bitmain announced the results of its latest round of funding. It reported a highly successful funding event that brought the company’s value up to around $15 billion after several large entities had made substantial investments. Among these WeChat platform owner Tencent out of China and Japan’s Softbank, which owns a 15% stake in Uber. However, it now appears that its information may have been a little off, as Softbank has denied any investment in the mining company.
Softbank published an official statement denying its involvement. Kenichi Yuasa with the institution’s Corporate Communication Office said, “Neither the Softbank Group Corp. nor the Softbank Vision Fund were in any way involved in the deal.”
Tencent and another supposed backer, China Gold, have neither confirmed nor denied their involvement. The news brings up serious concerns over the reliability of all of the information Bitmain released in its announcement following the funding round, and could have a huge impact on its upcoming initial public offering (IPO), as well as consequences with regulators.
The news that Bitmain had received large cash injections by several huge companies made it to the news wire rapidly, where it was picked up by a number of media outlets. Business Insider even reported on the funding round, saying that Bitmain had closed a “$1 billion funding round led by Chinese tech giant Tencent and Japan’s Softbank.”
Blockstream Chief Strategy Officer Samson Mow jumped on Twitter two days after the results of the funding were revealed, raising questions about the validity of the company’s information. He tweeted, “Why is Bitmain raising capital so fast & only showing Q1 results to pre-IPO investors? We’re well into Q3 now. The reason is Q2 was a disaster. Bitmain is sitting on a massive $1.24 billion USD in inventory & S9 prices dropped by ~85%! Q2 losses range in the $600-700 millions.”
Since June, Bitmain’s CEO, Jihan Wu, has touched upon the idea of launching an IPO on the Hong Kong Stock Exchange. The company has said more recently that it anticipates a September launch and is expected to have a valuation of around $30 billion prior to the event. However, the company will certainly be put under the microscope in light of the recent revelations.
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