Blockchain services and cryptocurrency mining hardware producer Canaan is facing a form-activeness 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 visitor's initial public offering (IPO). The constabulary firm claimed that Canaan investors suffered damages every bit the firm had made imitation and misleading statements and failed to disembalm 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 Substitution-listed visitor Grandshores (HK 1647) — was actually a transaction with a related party. Too, Canaan allegedly did not provide the investors with correct information nearly its financial condition, which was allegedly been worse than was reported. Amidst other allegations, the lawsuit said:

"The visitor had recently removed numerous distributors from its website just prior to the IPO, many of which were pocket-sized or suspicious businesses; and (iv) several of the Visitor'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 Police Firm is seeking restitution for affected investors.

Canaan carried out its IPO last November, wherein it raised $xc million — more 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 event of losing Canaan's biggest cyberbanking partner, Credit Suisse, just a week before the IPO.

An investigation into claims confronting 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 business firm states that it is acting on behalf of Canaan investors and aims to indicate whether Canaan actually issued misleading statements and failed to disembalm information pertinent to investors.

Both the investigation and lawsuit came in the wake of an analysis produced by Marcus Aurelius Value, which argued that the ASIC manufacturer had misrepresented its potential revenue for 2022 and that at to the lowest degree one of its customers is an alleged related party who is unable to honor a $150 million purchase contract.

The analysts based their claims on a highly irregular transaction relating to Canaan's IPO on November. 27. This refers to the $150 million deal between Grandshores ane month before the IPO, which would stand for an equipment order near equal to Canaan's acquirement in the past twelve months, which amounted to $177 million.

The analysts argued that Grandshores had no way of honoring the understanding, citing the visitor'south $fifty million market capitalization and $16 million cash balance.