The bipartisan bill, known as the Holding Foreign Companies Accountable Act, passed unanimously last week. The bill requires Chinese companies to disclose if they are owned or controlled by a foreign government. The Chinese companies must also submit to an audit that the Public Company Accounting Oversight Board (PCAOB) can review for three consecutive years. There have been instances in the past where Chinese crypto firms mislead investors by presenting inaccurate numbers.
The new law could delist Chinese blockchain companies from US stock markets.
For the China-based crypto mining hardware manufacturers, this new regulation might be the last nail in the coffin for their US capital market aspirations. It could lead to delisting for those that are already trading. There were controversies when several Chinese hardware makers attempted to list publicly in the past as they mislead investors. Two major Chinese crypto mining manufacturers Canaan and Bitmain, were accused of misleading investors regarding their financial well-being in the lead-up to an initial public offering (IPO). A lawsuit accuses Canaan of misleading an investor before their recent NASDAQ sale, which only raised less than one-quarter of its $400 million initial target.
Ebang filed a $100 million IPO with the US SEC.
Ebang, the Chinese crypto mining machine maker, recently announced that it filed for a $100 million IPO with the US Securities and Exchange Commission (SEC). The company’s financial statement shows that it made over $109 million in 2019, but it also had a deficit of around $41 million. However, the IPO move comes two years after it failed to get listed on the Hong Kong Stock Exchange (HKEx). According to the Sina Finance report, Ebang halted that $1 billion IPO while under a cloud of alleged involvement in illicit financial activities. Later last year, it was also reported that the company was under investigation by Beijing authorities.