Shareholder Sues Canaan for Violation of US Securities Laws

Azeez Mustapha
8 March 2020 | Updated: 8 March 2020

Chinese mining equipment giants are accused of misinforming investors about the status and safety of the company before their IPO. Canaan underwriters such as Galaxy Digital and Huatai Financial Holdings are also named in the lawsuit.

One of Canaan’s shareholders sued the company for violating US securities laws. Canaan is a very popular manufacturer of Bitcoin mining equipment. In a case filed on March 4, it is alleged that Canaan misleads its creditors regarding its financial condition and operational status when conducting an IPO at the SEC. In addition to Canaan, the case also included the names of the company’s underwriters as IPO defendants.

This, in particular, Galaxy Digital, China Renaissance Securities, Huatai Financial Holdings, CMB International Capital.

Interestingly, Credit Suisse, one of the first leading underwriters, left just a few days before the IPO.

Shareholder Philippe Lemieux stated that on February 12, he bought 200 shares of Canaan for $ 8.50 apiece. He claimed that Canaan deceptively called the $ 150 million purchase agreement with a related party “strategic partnership,” while the owner of the buying company, Hangzhou Granshores Weichaeng Technology, actually owns a 9.7% stake in Canaan.

The lawsuit claimed that before the IPO, Canaan secretly removed several distributors from its website. It is also reported that some of the company’s customers are unlikely to be in first place in bitcoin mining.

The status of the class action, in this case, has not yet been decided by the court. Rosen Law Firm, which represents Lemieux, has announced that it is asking more investors from Canaan to take part in a class-action lawsuit.

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Azeez Mustapha

Azeez Mustapha

Azeez Mustapha is a trading professional, currency analyst, signals strategist, and funds manager with over ten years of experience within the financial field. As a blogger and finance author, he helps investors understand complex financial concepts, improve their investing skills, and learn how to manage their money.