Ebang shares slide 14.8% after short-sell call

Shares of the mining company Ebang fell 14.8% in trading on 6-7 April. The market reacted to a report by Hindenburg Research recommending investors to short the stock.

NEW FROM US– Ebang: Yet Another Crypto “China Hustle” Absconding With U.S. Investor Cash

(1/x)https://t.co/mxSmlvKii3 $EBON

— Hindenburg Research (@HindenburgRes) April 6, 2021

Experts warned that the China-based firm misled investors about how its investments were allocated.

The report claims that of the $374 million raised across four rounds after the IPO, Ebang allocated $103 million to buy shares of underwriter AMTD Group with a dubious reputation. $21 million of these funds went to repay loans taken out by a relative of founder Dong Hu.

The authors noted that the manufacturer’s sales had fallen to a trough and its product line was dated. In the first half of 2020, Ebang shipped 6,000 mining devices.

Hindenburg Research also pointed to the recently launched Ebonex platform. The analysts’ view is that it appeared to be a ‘diversion’.

Analysts said Ebang serves as a reminder of the need to follow the caveat emptor principle [caveat emptor]. It obliges investors to conduct due diligence before buying shares.

The company said that Hindenburg Research’s conclusions were unfounded.

The report contains many errors, unsubstantiated speculation, and inaccurate interpretations of events. The company will take all necessary and appropriate measures to protect shareholders’ interests, the press release said.

In June 2020, Ebang outlined plans to expand its business by creating an exchange after the Nasdaq IPO.

In February 2021, ForkLog reported that Ebang shares had not reached new highs, unlike rivals. Among the reasons cited were unsatisfactory financial resultsfor the first half of the year.

Follow ForkLog news on Facebook!