Ebang International Holdings Inc (NASDAQ: EBON) traded at $4.01 in the premarket, as recently checked. This is a 4.98% decrease from the last day’s trading. Things did not look too well in the regular market either. EBON stock closed at $4.22 on April 15, 2021. Compared to the last day’s closing, this was a 9.64% decrease in price. A lawsuit was filed against EBON last year, and that has caused a constant decline in its stock.
What does EBON do?
Ebang International Holdings Inc is a Chinese firm that was established in 2010 by Dong Hu. It is a blockchain technology company and a strong capability to design supplication-specific integrated circuit (ASIC). EBON has become a leading bitcoin mining machine produce in the global market with time.
EBON’s Class Action Lawsuit
A securities fraud class action lawsuit has been filed against EBON. This is on the behalf of those who purchased Ebang securities between June 26, 2020, and April 5, 2020. On April 6, 2021, a complaint was launched that EBON was directing its proceeds from its initial public offering(IPO) last year into “a series of opaque deals with insiders and questionable counterparties”.
A report published about the lawsuit discussed that EBON raised $21 million in November 2020. The company claimed that this money will be used for development purposes but instead was used to repay loans to Dong Hu’s relative. The report further stated that EBON failed to go public on the Hong Kong Stock Exchange due to extensive media coverage of its sales inflation arrangement with Yindou. After this news was shared, EBON’s share price fell $0.82 (around 13%). On April 6, 2021, it closed at $5.53 per share. The lawsuit complaint alleges that EBON failed to disclose important information to its investors. For instance, EBON’s sales were declining but it inflated the reported sales and including the sale of defected items too.
What Happens Next with EBON?
EBON investors can seek to be appointed as lead plaintiff in the class action lawsuit before June 7, 2021. Kessler Topaz Meltzer & Check, LLP is leading the case.