Investors Received False Information About Bitmain Funding Round

Parties solicited to invest in the pre-initial public offering funding round for Bitmain Technologies, Ltd., the leading maker of cryptocurrency mining software and hardware, received pitch decks falsely suggesting the company had secured financial backing from Digital Sky Technologies Global and GIC Private Limited, an investigation by CoinDesk has found.

CoinDesk was unable to verify the authenticity of the three versions identified and reviewed outside of those who received them because Bitmain has not responded to multiple inquiries concerning their production and dissemination, even though all of them printed the company name and a confidentiality warning on each slide, and two versions prescribed deadlines and methods on bank wiring instructions.

One version of the pitch decks, originally written in Chinese and translated into English by CoinDesk, described Bitmain as having "Recently completed a $400 million Series B round of financing from Sequoia Capital, DST and GIC, with a pre-investment valuation of $12 billion" and was forwarded by someone claiming to have access to the deal and knowledge that Bitmain created the pitch deck without offering proof, says a source who came into possession of the copy.

The other two versions, worded differently and already formatted in English, stated Bitmain had "Raised another $400 million at a $12 billion valuation from investors such as Sequoia China, GIC and DST in a Series B round" and circulated in public social media discussions and private email exchanges where one copy was procured from participating in the pre-IPO round, according to another source who claims the pitch deck originated from Bitmain.

Many voices in the cryptocurrency community accused Bitmain of spreading the false claims following the CoinDesk report, but the sourcing for the IPO Zao ZhiDao article has been unclear.

The link between Bitmain and these latest misrepresentations about DST Global and GIC, while inconclusive, appears less tenuous enough to compel a serious reaction from the source who spoke with CoinDesk about receiving an English pitch deck and investing in the pre-IPO round.

The source, who claims a Bitmain investor provided the pitch deck after introducing and co-signing the offer, communicated feeling sufficiently "Unsettled" by the debunked assertions to consider taking legal action against Bitmain, believing the claims to be true when the deal was being finalized.

In any case, if Bitmain is discovered to have been responsible for advertising the false claims in the pitch decks, the legal implications could be significant.

In Hong Kong, where Bitmain is physically located, a company that makes false statements "For the purpose of inducing another person to enter into an agreement" could face legal liability for committing "Fraudulent or reckless misrepresentation," Ashurst LLP legal counsel Hoi Tok Leung said in an email.

Still, not every investor has come in contact with the pitch decks containing the false claims, limiting the magnitude of any potential legal recourse against Bitmain.