[Beijing Business Daily] (Reporters Yue Pinyu, Liao Meng) Ebang International, a NASDAQ-listed company, has recently found itself in the spotlight following a short-seller report. On April 8, it was noted that Ebang International responded to allegations from short-selling firm Hindenburg Research in a pre-market announcement on April 7. Despite the rebuttal, the company’s stock price continued to decline.
In its official response, Ebang International refuted Hindenburg Research’s claims as "baseless speculation" with "numerous errors." The board and audit committee pledged to review the allegations thoroughly and take necessary actions to protect shareholder interests. However, this failed to reassure investors—Ebang’s stock dropped 2.17% by market close on April 7, marking a 36.32% decline over four consecutive trading days in April.
When questioned about plans to disclose investigation details, the status of its core mining hardware business, and strategic pivots, Ebang International did not respond before press time.
Key Allegations from the Short Report
Hindenburg Research’s April 6 report accused Ebang of being a "scam disguised as a Bitcoin mining play," highlighting four critical issues:
- Fund Misuse: Suspicious transactions involving insiders and unnamed buyers allegedly diverted raised capital.
- P2P Scandals: Ties to the Yindou P2P lending platform’s collapse.
- Business Decline: Sharp contraction in mining hardware sales.
- Exchange Fraud: Newly launched cryptocurrency exchange Ebonex was accused of using white-label technology and faking trading volumes.
Industry Perspectives
- Mining Hardware Challenges: Researchers note declining profitability in mining hardware sales, with Ebang’s 2019 hash rate sales lagging behind competitors.
- Venturing into Crypto: Ebang’s recent moves—launching Bitcoin/Litecoin mining operations (February 2021) and Ebonex exchange—aim to diversify revenue. However, critics argue that buying a pre-built exchange system (e.g., Blue Helix’s platform) risks security and sustainability.
- Strategic Crossroads: Analysts suggest Ebang, originally a telecom equipment firm turned blockchain hardware producer, faces steep competition in exchanges. Alternatives like pivoting to traditional chip manufacturing for defense or AI could offer stability.
FAQ Section
Q1: Why did Ebang’s stock drop despite its rebuttal?
A1: Investors remained skeptical due to unresolved allegations and the company’s lack of detailed evidence.
Q2: What risks does a "white-label" exchange pose?
A2: Dependence on third-party tech raises security concerns and limits customization, potentially undermining user trust.
Q3: Could Ebang shift focus away from crypto?
A3: Yes. Its expertise in chip design could be redirected to sectors like healthcare or fintech, though this requires significant R&D investment.
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