Blockchain services and cryptocurrency mining hardware producer Canaan is facing a class-action lawsuit filed by investors following claims of dubious practices for attracting investments.
Investor rights-focused law firm Rosen Law Firm has initiated the suit on behalf of Canaan securities purchasers in the company’s initial public offering (IPO). The law firm claimed that Canaan investors suffered damages as the firm had made false and misleading statements and failed to disclose a number of issues.
Canaan allegedly misled investors regarding a partnership
According to the announcement, Canaan did not reveal to its investors that a purported “strategic partnership” — apparently with Hong Kong Exchange-listed company Grandshores (HK 1647) — was actually a transaction with a related party. Also, Canaan allegedly did not provide the investors with correct information about its financial condition, which was allegedly been worse than was reported. Among other allegations, the lawsuit said:
“The company had recently removed numerous distributors from its website just prior to the IPO, many of which were small or suspicious businesses; and (4) several of the Company’s largest Chinese clients in prior years were clients who were not in the Bitcoin mining industry and, thus, would likely not be repeat customers.”
Rosen Law Firm is seeking restitution for affected investors.
Canaan carried out its IPO last November, wherein it raised $90 million — more than 75% less than was expected. Canaan has initially planned to raise considerably more, with a funding figure of $400 million circulating prior to the event.
The failure was purportedly a result of losing Canaan’s biggest banking partner, Credit Suisse, just a week before the IPO.
An investigation into claims against Canaan
Additionally, a shareholder rights litigation firm, The Schall Law Firm, has begun an investigation into purported violations of securities laws by Canaan. The law firm states that it…