Hong Kong Stock Exchange CEO Cast Doubt On Crypto Giant Bitmain’s IPO Attempt

Charles Li Xiaojia, the chief executive of the Hong Kong Exchanges and Clearing talked about the importance of consistency of crypto firms with their business models in order to go public. Though Li didn’t mention any particular names, it seemed that he took a swipe at latest IPO application of Bitmain amongst other crypto mining rig firms like Canaan Creative and Ebang International Holdings who filed an application to go public in Hong Kong are yet to received approval.

The IPO applications of these 3 firms are now in jeopardy as 80 % has been wiped off the crypto markets in the past several years because the virtual currencies are still struggling to recover.

“If a company made billions of US dollars through Business A, but suddenly said it will do Business B without showing any performance or said Business B is better, then I don’t think the Business A featured in their application will be sustainable.
Besides, if regulators were hands off [on Business A] in the past but will regulate it in the future, will you be able to continue the business and still make money from it?” is what Li quoted at the World Economic Forum.

He also added:
“If yes, the question for the HKEX is Can you still do this business, can you make this money?” The HKEX will “adhere to the principle of market adaptability when reviewing companies’ IPO applications, including those of crypto miners.”

The crypto mining giant Bitmain filed its IPO application with the HKEX in last year September 2018. Whereas on the other hand Canaan Creative and Ebang International Holdings filed their applications in May an June 2018 respectively. But HKEX is reportedly reluctant to approve Bitmain’s IPO, which has become quite evident now. However, a person in an interview with News Media said that the exchange is “very hesitant to actually approve these bitcoin mining companies because the industry is so volatile.”

Ebang has again filed its IPO prospectus in December 2018 but seems like the crypto mining firm experienced a significant decrease in revenue and gross profit in Q3 2018. Canaan is also reportedly filed IPO in the U.S. in the first half of the year 2019, although the process is still in its early stages.

Li might be suggesting that crypto mining rig firms like Bitmain were having a successful business model in order to justify the upcoming success of a completely different business model.