SEC threatened Canaan with delisting from Nasdaq Stock Exchange

The company has until May 25 to prove that it is not “owned or controlled” by a foreign government

06.05.2022 - 12:55

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What’s new? Chinese crypto mining rig maker Canaan has reported that it has come under scrutiny by the US Securities and Exchange Commission (SEC) over its collaboration with Beijing. The regulator noted that the company could face delisting from the Nasdaq stock exchange.

Information on the SEC’s website

What are the SEC’s suspicions based on? According to the regulator, Canaan used for its 2021 annual report an auditor that the US Public Company Accounting Oversight Board (PCAOB) could not fully identify. That auditor was KPMG Huazhen LLP.

Under the Holding Foreign Companies Accountable Act (HFCAA), Canaan has until May 25 to provide the SEC with proof that it is not “owned or controlled” by a foreign government. Adopted in 2021, the HFCAA aims to remove foreign-controlled companies from the US public markets.

“The Company will continue to comply with applicable laws and regulations in both China and the US, and strive to maintain its listing status on Nasdaq,” Canaan said in a statement.

What is known about Canaan? The company was founded in 2013 by Nangeng Zhang and is headquartered in China. It specializes in blockchain servers and ASIC microprocessor solutions for bitcoin mining. Canaan was listed on Nasdaq in 2019.

What events happened before? In mid-March, Canaan announced a share buyback. The company allocated up to $100 million to this project. The statement said that the shares had slumped by 85% over the year. This dynamic was attributed to quarantine measures related to the COVID-19 pandemic and macroeconomic factors in the market.

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