Bitmain Holds Nearly 6% of Bitcoin Cash Supply, Accused of Price Manipulation for IPO
Surfaced documents suggest that Bitmain has accumulated nearly $1 billion worth of Bitcoin Cash, raising eyebrows over the cryptocurrency’s role in a prospective $18 billion initial public offering (IPO).
The documents were first tabled by Samson Mow in a Tweet, who included an excerpt from the pre-IPO prospectus released for the upcoming raise:
According to the Bitmain pre-IPO investor deck, they sold most of their #Bitcoin for #Bcash. At $900/BCH, they’ve bled half a billion in the last 3 months. If Bitcoin Core devs didn’t disclose the Bcash vulnerability, it could’ve wiped a billion dollars off their balance sheets. pic.twitter.com/9BMywdvvby
— Samson Mow (@Excellion) August 11, 2018
While the document cannot certify Bitmain’s cashflow, the multinational appears to have been liquidating its holdings of Bitcoin to purchase vast quantities of Bitcoin Cash, the fourth largest cryptocurrency by market capitalization.
According to the investor deck, Beijing-based Bitmain has been steadily pouring its resources into Bitcoin Cash for years—having gone from holding zero BCH in December 2016 to a total of 1,021,316 in March 2018, or 5.9 percent of the circulating supply (the first column representing the quantities of holdings, and the second denoting the price per unit paid in USD).
Cooking the Books?
According to the document, in the first three months of 2018 the corporation purchased roughly $159 million worth of Bitcoin Cash, while it only sold $89 million worth of Bitcoin. While the figures clearly do not tell the whole story, and some question their authenticity:
How can any institutional investor trust anything Jihan says or any document he creates?
— 𝑅𝑎𝑔𝑛𝑎𝑟 𝐿𝑖𝑓𝑡ℎ𝑟𝑎𝑠𝑖𝑟 🏴 (@Ragnarly) August 12, 2018
While such accusations are not to be taken lightly, Bitmain may stand to gain if investors believe the company commands such a substantial supply of BCH. On the cusp of a historic $18 billion IPO, one larger than Visa’s, any ability to inflate the company’s valuation may win over prospective investors.
The consensus amongst conspirators seems to be that Bitmain is using devious tactics to boost the valuation of BCH, which accounts for roughly 70 percent of the company’s $1.2 billion valuation, according to the document.
Based on Bitmain’s checkered relationship with Bitcoin Cash, this conclusion might not be seen as far-fetched.
In April, Bitmain-owned mining pool Antpool was alleged to have artificially pumped up the price of Bitcoin Cash by more than 25 percent after it announced it would be burning a portion of its mining rewards.
Thomas Harpointer, CEO of Atlanta-based AIS Media, went as far as to suggest the strategy might run all the way to the top and that a number of (Chinese) state-owned corporations were privy:
Many institutional investors could be Chinese. And many top Chinese companies are mostly state-owned.
Jihan is smart and well networked. Seems to me like a strategy to use BCH to boost Bitmain’s valuation. Upcoming BCH pump wouldn’t surprise me. https://t.co/dnwoyEGbC2 pic.twitter.com/uA5o2nozmb
— Thomas Harpointner ♞ (@TomHarpointner) August 12, 2018
If Bitmain’s BCH holdings are as ample as they claim, the latest revelation may prove deeply troubling on several levels. Having unsettled a number of community members in June when it mined 42 percent of all blocks on the Bitcoin network, Bitmain appears to have its sights firmly set on Bitcoin Cash.
Should Bitmain truly possess the ability to manipulate the price of BCH, the corporation appears to have unyielding power over two of the largest cryptocurrencies by market capitalization.
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