Bitcoin mining hardware maker Canaan hit with securities lawsuit in U.S. court

Quick Take

  • Bitcoin mining equipment maker Canaan has been sued by one of its investors for violating the U.S. security laws 
  • The alleged investor claimed that he purchased 200 shares of CAN near its all-time high on February 12, when CAN surged by over 80%
  • Citing a blog post published by a short seller, the complaint stated that Canaan misled investors in its IPO filing

A stockholder of bitcoin mining hardware maker Canaan is suing the company for violating U.S. securities law.  

Filed on March 4 at the United States District Court for the District of Oregon, the lawsuit alleges that the Chinese firm misled investors about the company's financial health and operations status in its initial public offering (IPO) filing to the Securities and Exchange Commission (SEC). 

In addition to Canaan, the lawsuit also names the firm's underwriters for this IPO as defendants, including Galaxy Digital, China Renaissance Securities, Huatai Financial Holdings, CMB International Capital, and others. Notably, one of the original lead underwriters Credit Suisse dropped out a few days before the IPO. 

The plaintiff, named Phillippe Lemieux, stated that he bought 200 Canaan shares on February 12 at $8.50 apiece, near the all-time high. In the complaint, Lemieux 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. 

The complaint further alleged that Canaan quietly removed some distributors from its website prior to the IPO, and also claimed that some of the company's stated clients are not likely to be in the  bitcoin mining industry at all.

Notably, the complaint cites heavily a February 20 blog post by Marcus Aurelius Value, which states at the outset that "we are short Canaan (NASDAQ: CAN)." The complaint included excerpts from the blog post under the section "The Tru