Short-seller Hindenburg Research said on Tuesday it had taken a short position on Ebang International Holdings Inc, sending the Chinese bitcoin mining machine producer’s shares down more than 12%.
“Ebang claims to be a ‘leading bitcoin mining machine producer’, yet our research indicates this extraordinary claim is backed by no evidence,” the short-seller said.
“Ebang released its final miner in May 2019 and has since seen its sales dwindle to near-zero, delivering only 6,000 total miners in 1H20.”
Short sellers sell borrowed shares in the hope of buying them back at a cheaper price and pocketing the difference.
In a statement on Wednesday, Ebang said the Hindenburg report contained many errors, unsupported speculations and inaccurate interpretations of events.
It added it intends to further review and examine the allegations and take necessary action to protect the interest of its shareholders.
The recent bitcoin mania has fueled a surge in fundraising by Chinese companies seeking to expand their cryptocurrency operations or move into the red-hot sector.
Ebang debuted on Nasdaq in June last year and had conducted two fundraising rounds in February alone, raking in $170 million, even after a previous offering in November.
Hindenburg, which went short on another Chinese blockchain company Sos Ltd in February, said its research revealed that instead of using capital proceeds to develop its business, Ebang directed much of the cash out of the company through “a series of opaque deals with insiders and questionable counterparties.”
Hindenburg had also taken short positions in electric vehicle companies including Lordstown Motors, Nikola Corp, Kandi Technologies Group Inc and insurer Clover Health in the past year.