In September, Bitmain announced its plans to go public. As per procedure, the firm disclosed its books, for the first time. Unfortunately, already questions arise over Bitmain profits, as reports suspect massive manipulation of figures.
A recent report by the Financial Times casts doubts the integrity of the profit figures circulated by the company. According to the report, the company distributed different figures for its 2017 profits on different occasions.
In particular, Bitmain indicated in its initial public offering (IPO) prospectus that its 2017 profits were $701.4M USD. Interestingly, the company had indicated just one month earlier a $1.1B USD profit for the same period. Further, Bitmain circulated yet another different figure for profits during a Series B fundraising in June of this year.
Questions Arise over Bitmain Profits ahead of IPO
It is mindboggling that the firm had the audacity to circulate different figures at different occasions. Moreover, Bitmain was not willing to comment on the disparities. Instead, the firm directed questions to “Please refer to our IPO prospectus for appropriate figures.” The leading banking and audit institutions involved with Bitmain declined to comment on the allegations.
However, heads are already rolling at Bitmain as a result of the profits discrepancy expose. In particular, reports from China indicate that Wu Jihan, Co-Founder and former director of Bitmain, lost his position. Sanyan Blockchain reports that Jihan is now a mere supervisor at the firm.
Interestingly, this implies that the second majority shareholder of Bitmain will not have voting rights at the firm. Further, this indicates that he will not be in a position to influence policy and strategy. This is quite a stark contrast from the towering figure that transformed Bitmain from a humble startup in 2013.
However, the times are not only tough for Jihan. Bitmain is an important player in the cryptocurrency industry. Impressively, the company accounted for 74.5% market share of the crypto mining hardware manufacturing industry.
Therefore, as questions arise over Bitmain profits, this may put the whole sector in jeopardy. Specifically, potential investors will shy away from the proposed IPO and the firm will lose out on the expected capital.
Already, investors had jitters about Bitmain’s IPO considering that this year is challenging for cryptocurrencies. As a result of the poor performance, mining activity is not as intense as it was last year. Further, miners claim that it is now more expensive to mine one block of Bitcoin (BTC).
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