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  • The Chinese mining hardware giants are accused of misinforming the investors about the company’s status and health before its IPO.
  • The lawsuit also includes the names of Canaan’s underwriters, such as Galaxy Digital and Huatai Financial Holdings.

One of Canaan’s stockholders is suing the firm for violating US Securities law. Canaan is a popular Bitcoin mining hardware producer. The lawsuit, which was filed on March 4, alleges Canaan of misleading its investors about its financial health and operations status in its IPO filing to the SEC. Apart from Canaan, the lawsuit also included the names of the company’s underwriters for the IPO as defendants. This included Galaxy Digital, China Renaissance Securities, Huatai Financial Holdings, CMB International Capital, among others. Interestingly, Credit Suisse, one of the original lead underwriters, dropped out just a few days before the IPO.

The stockholder, Phillippe Lemieux, stated that he purchased 200 Canaan shares on February 12 at $8.50 apiece. He claimed that Canaan misleadingly labeled a $150 million purchase agreement with a related party as “strategic cooperation,” while, in fact, the chairman of the purchasing firm, Hangzhou Granshores Weichaeng Technology, owns 9.7% of Canaan shares.

Furthermore, the complaint alleged that Canaan silently removed a few distributors from its website before the IPO. It also claimed that some of the company’s clients aren’t likely to be present in the Bitcoin mining industry in the first place. The court is yet to determine the class-action status of this case. Rosen Law Firm, which is representing Lemieux, announced that it is calling for more Canaan investors to join the class action.