Bitmain asked to suspend its US IPO due to connection with BitClub Ponzi scheme
|- Bitmain is in big trouble for allegedly selling mining equipment to BitClub, which defrauded victims of over $722M.
- If Bitmain is held partly responsible for this, it will have to liquidate a significant portion of its BCH to make up for the losses.
A few days back, BTCKING555 (@btcking555) reported on the investigation by the American Department of Justice on the connection of Bitmain with the Ponzi scheme BitClub. According to a New York Times report, five people were charged in connection with the scheme in December.
Back in October, BeInCrypto had reported that with the help of Deutsche Bank, Bitmain quietly filed for an IPO in the US. However, an insider is now reporting that Bitmain is being advised to suspend its USA IPO as it is allowing the victims of BitClub to sue Bitmain for damages. Bitmain's Jihan Wu has been instructed not to travel to the US.
BTCKING555’s tweet reads:
Breaking: the insider says Bitmain USA legal advisors Davis Polk is advising against USA IPO as Bitclub case will have to be disclosed as “material event” and victims can go after public Bitmain for $722 million in damages. Jihan directed not to travel to USA.
Samson Mow (@excellion) also noted that Bitmain was recently added to The Information’s list of troubled tech firms. Due to deep internal issues, Bitmain is planning to lay off 50% of its employees.
The mining giant’s legal issue will also affect Bitcoin Cash’s own market price. The damages put forward against BitClub is $722 million and if Bitmain is held responsible, the company will have to reach deep into its reserve to pay this. This increases the likelihood of Bitmain liquidating a large section of its BCH holdings to make up for these losses, and this might result in BCH/USD falling down.
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