The first stock in China's auto loan company became a Bitcoin mining company, and the stock was shorted.

This is a story about "China's first car loan stock" on the verge of delisting, the real controller had been "red pass", and then tried to save their own return, but the outside world is full of doubts.

The chairman of the board, CEO and CSO resigned from Nasq-listed Bit Digital on February 4, citing "health reasons" and "no involvement in the company's mining business."

In addition to internal strife there were external invasions. J Capital Research, a well-known short seller in the United States who has attacked domestic IDC service provider International Data, used car e-commerce platform Uxin and Sheng Mei Semi Conductor, also targeted the number of bits. Earlier this year, the firm issued a short report alleging that Bit Digital's investment of tens of millions of dollars into the cryptocurrency business was a scam.

Buying mining machine is false, fund raising cash is true? What happened to Bit Digital, a publicly traded company that was cleaned up after the P2P boom, which nearly collapsed, and is now back in business?

High-level sudden by "change blood", investors sued collectively

On February 4, 2021, Nasdaq-listed mining company Bit Digital underwent a sudden management shake-up when its board announced that Min Hu had been removed as CEO and that CFO Erke Huang had taken over as CEO. In addition, the company's chairman of the board, Ping Liu, has resigned for "health reasons", while another board member, Zhaohui Deng, will be appointed chairman of the board.

And that's not all. Yuhong, one of the company's most familiar figures in cryptocurrency circles, has also resigned as chief strategy officer and director of Bit Digital. Bit Digital did not offer any further explanation on the "turbulence" at the top, except to say that CEO Min Hu was "not involved in the mining business".

So what has caused such a big shakeup at the top of Bit Digital? It all started with that short report on January 12, 2021.

On January 13, 2021, J Capital Research issued a short note on Bit Digital. The report said an investigation found that Bit Digital's filings showing it operated nearly 23,000 bitcoin mining machines in China were "false." J Capital Research asked the miner seller, who denied having a business relationship with Bit Digital. Bit Digital was also described in the report as a company operating a "fake Bitcoin business."

Bit Digital's share price quickly plunged 25 per cent on the report. To limit the impact, companies have to respond.

On January 19, Bit Digital announced that its Bitcoin mining business is doing well. The company actually owns 40,865 mining machines. The Bitcoin mining business can be verified by third-party mining pools Huobipool and Ant Mining Pool, and has been verified by auditors on site. In addition, the announcement revealed that BIT Digital earned 1,331.2 Bitcoins in 2020.

But the response did little to quell investor anger. In late January, investors filed a class action lawsuit in the U.S. District Court for the Southern District of New York, alleging that Bit Digital's "positive statements about the Company's business, operations and prospects are materially misleading and/or without reasonable basis." It wasn't long before news of the shocking resignations of Bit Digital's top brass came out.

In fact, as a P2P company, the doubts surrounding Bit Digital have not gone away.    

From peer-to-peer companies on the brink of delisting to hot mining companies

Bit Digital was formerly known as Golden Bull Limited, known in Chinese as Dianniu Finance.

Founded on November 17, 2015, the main business of Dianniu Finance is to provide loans to borrowers guaranteed by automobiles. On March 20, 2018, Dianniu Finance was listed on NASDAQ with the stock code "DNJR".

At that time, with the title of "the first stock of car loan in China", the listing of Dianniu Finance attracted a lot of attention. The opening price on the first day was $5.20, and the highest price was $13.55 per share, with a market value of more than $200 million.

  Pictures from the Internet

However, since 2018, in the P2P industry began to explode and the regulatory authorities began to purge and rectify the background, as a P2P operator, Dianniu Finance could not escape, the number of defaulted loans on the platform continued to increase, and the operating conditions gradually deteriorated.

On July 21, 2019, the point of cattle financial suddenly spread moving news, suspected lost contact. Subsequently, on October 24, Shanghai Pudong Public Security News reported that on July 31, 2019, the investigation of Dianniu Finance on suspicion of illegally absorbing public deposits had been initiated, and 17 suspects involved in the case were subjected to criminal coercive measures.

However, on October 31, 2019, just one week after the filing of the case, Dianniu Financial announced that Zeng Erxin, former chairman and CEO of the company, CFO Leng Leng and director Liu Xiaohui had been removed by the board of directors. In addition, the announcement said that Dianniu Finance would end its peer-to-peer business and start a new one, with revenues expected to come from equity and debt financing -- and the company had already signalled a transformation.

This attempted makeover notice, and did not save the dying point cattle finance.

On November 4, 2019, the Nasdaq Stock Exchange announced that it was suspending the trading of Dianniu Financial shares. According to the notice, the stock price of Dianniu Financial has been below $1 for 30 consecutive working days, no longer meeting the minimum bid requirement of Nasdaq listing rules. When we look back at the stock price of Cow Financial, we can see that the price at that time is almost zero.

Screenshot by: Yingwei Finance

The fallout from the previous financial crash lasted well into 2020. According to the police notice on March 24 last year, the public security organs have issued a new red notice to Zeng, the actual controller of "Dianniu Finance" through Interpol. In addition to the 7 who were investigated and prosecuted, another 14 suspects were subjected to criminal coercive measures in accordance with the law.

However, due to some financial cattle (hereafter Bit Digital) "coming back to life" operation, the main business transformation to chain mainly engaged in the production of the derivatives business, and other Digital assets, and change the code and after the change of company name, business transformation and injected new momentum for rising stock prices, the currency after meet the requirements of the nasdaq is trading again.

Digital currencies are the new business chosen by Bit Digital.

In February 2020, Yu Hong, a well-known figure in the coin circle, announced her appointment as BIT Digital CSO (Chief Strategy Officer) and accelerated its expansion into Bitcoin mining.

Who is Yuhong? Yuhong's name is well known among longtime cryptocurrency players. He rose to fame when he launched the "3 o 'clock blockchain group" during the 2018 Spring Festival, and then fell from fame when he launched the XMX project and then broke his service. As the price of his XMX project continued to fall, countless investors lost their money, and Yuhong herself was reviled by the entire crypto community.

The acquisition of BIT Digital may also be another manifestation of Yuhong's obsession.

In 2019, Yuhong took the risk of being "scolded" and began to be active in various communities. At that time, a number of insiders told RulyBlockBeats that XMX was pulling the plate, and the reason for pulling the plate was related to the Bitcoin mining project Yuhong was working on.

Yuhong had previously raised money from insiders to create a 5 billion yuan fund that would invest mainly in bitcoin mines. There were few takers and no money was raised. Unable to raise funds, Yuhong has not given up on Bitcoin mining.

In September 2020, media reported that Yuhong formally acquired Dianniu Finance and renamed it Bit Digital. The main business happens to be bitcoin mining.

After the restructuring, Bit Digital became one of the hottest publicly traded mining companies in the US. Then, in November and December 2020, Bit Digital raised tens of millions of dollars at prices well below the market price of the stock, which it said would be used to buy bitcoin mining machines "located in Xinjiang, Sichuan and Inner Mongolia, and expected to be fully installed by the end of December 2020."

According to the information, Bit Digital purchased approximately 17,996 Miners (all Ant Miners or whatever). The news helped fuel the company's stock price, which rose more than 1,800% from the beginning of 2020 to the end of the year.

Rather than relying on business transformation, Bit Digital's unusual entry into mining attracted the attention of J Capital Research, which led to the short selling incident, followed by an investor class action lawsuit.

Even if Bit Digital is in trouble, its stock price hasn't been hit hard, with BTBT closing at $18.55 on Feb. 4, up slightly at the time of writing. Of course, this may be due to the current hot cryptocurrency market, with Bitcoin's influence growing by the day. In the aftermath of the epic long/short battle on Wall Street, Bit Digital may be able to fend off the short sellers after a series of personnel changes.

But Bit Digital's problem may be more that a Nasdaq-listed US company has its Bitcoin mining business in China. Whether or not Bit Digital actually bought the machines, and how much of the stock sales went into the mining business, is unclear to investors on the other side of the ocean.

But from this perspective, Bit Digital is a natural thorn in the side of US short sellers. Poor information and the opacity of information plunge companies into a more uncertain environment. Bit Digital, of course, is not the only public company targeting the word "Bitcoin."

After listed companies entered bitcoin mining

Global stock markets are rallying nicely, especially as companies dabbling in bitcoin seem to have some magic.

From Microstrategy CEO regardless of personal danger heavy warehouse bitcoin, to the old game company 9 cities announced "crossover" mining, and then on February 3 this year, the well-known shipping company in the world shipping (SINO) announced to enter bitcoin mining. All three companies, without exception, have seen unprecedented gains.

Among them, the share price of MicroStrategy soared all the way after the public purchase of Bitcoin, while the stock of the game company Nine Cities soared 321% in three days after it announced that it would participate in cryptocurrency mining. CGT also enjoyed a "dividend" from Bitcoin, with its stock rising from a high of $4.70 to $10.30 in 24 hours, a rise of nearly 120%. There are many more, such as 500.com, a lottery website, and SOS, a loan-turned-company.

During the cryptocurrency bull market, these digital currency/blockchain stocks were easy to take off on. After some listed companies announced their application or research and development of blockchain technology, their stock prices rose sharply in a short period of time. But the experience of 2018 suggests that such short bursts of good news do not last long, and that when a bear market or regulation arrives, most companies fall back to where they were before, or perform even worse. At the beginning of the Thunder, everyone film is a good sample.

Now, Bit Digital shares remained above $18, so to speak, compared with a year ago almost delisting of the bad situation has been changed, and, in the currency under the background of record prices, if a Bit behind the Digital does have real mill (it is difficult to find out, after all, the official did not disclose deposit currency address for verification), and can quickly sort out the "chaos", perhaps in the future in a short period of time, given the results of data will be good.

Moreover, in the medium and long term, the earnings from Bitcoin mining are bound to remain high for a long time. For those listed companies that have invested heavily in mining, the business beyond mining cannot be ignored.    

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