A federal judge in Manhattan on Thursday chose a Hong Kong couple to lead the securities-fraud lawsuit against Bitcoin mining machine manufacturer Canaan Inc even though they had filed the information to support their class leadership motion two weeks late.
U.S. District Judge John Cronan said that Bill Lu and Liyang Huang were presumed to be the best choice for lead plaintiffs because they allegedly lost the most money – some $1.3 million dollars – when Canaan’s share prices fell 30 percent after the company released its fourth-quarter and fiscal 2020 results in April. Cronan also approved their attorney, Marion Passmore of Bragar Eagel & Squire, as lead counsel.
Dr. Mahinderjit Singh, a New York psychiatrist who allegedly lost more than $550,000, argued that the information should have been filed with the motion to serve as lead plaintiff. Lu and Huang’s failure to do so “demonstrates their inadequacy” as lead plaintiffs, wrote Singh’s lawyer, Naumon Amjed of Kessler Topaz Meltzer & Check, quoting heavily from a decision by a federal court in Chicago.
Cronan, though, said the Manhattan-based court has no rule against considering later-filed affidavits, and that Lu and Huang’s affidavits indicate that they are both professional business people with investment experience.
Attorneys for Singh, Lu and Huang, and first-named plaintiff Jason Denny did not immediately respond to requests for comment on Thursday. Denny did not seek lead plaintiff status.
According to the complaint filed April 15, Canaan’s American Depository Receipts were trading at under $7 before the company announced, on Feb. 10, that it had 100,000 orders for Bitcoin mining machines – computers that do nothing but solve the complicated blockchain equations that result in the minting of a new “coin.”
The ADR price fell from $18.67 to $13.14 on April 12, when the company’s 2020 financials showed a 93 percent year-over-year decrease in net revenue, the complaint says.
The case is Denny et al v. Canaan Inc et al., U.S. District Court for the Southern District of New York, No. 21-3299.by