SOS Limited (NYSE:SOS) stock price grew by 5.27% with the current price being at $5.78. The company is offering more of its stock as warrants. These warrants come in the shape of American Depositary Receipts (ARDs) are the ones available for trading in the US, and investors recently came under the pressure of selling these ADRs for $4.05 each and acquired 23.88 million. This had allowed SOS to gain $96.7 million in proceeds.
The company went further on to give more additional warrants for 23.88 million more ADRs for $7 per ADR. This would have caused investors shares to dilute and now that the market force is generally pressured towards selling stocks, the investors are selling their new ADRs as well.
From Insurance company to crypto-mining company to shell-company allegations
In August 2020, the SOS company acquired its insurance brokerage qualifications in China and also acquired 100% equity interests of Inner Mognolia Post Insurance Agency Co. The now-known Mongolia SOS Insurance Agency Co. Ltd. (Inner Mognolia SOS) can conduct sale of insurance products and collect insurance premium.
Then on January 2021, The Company announced its crypto mining plans for investing heavily into acquiring mining machines and benefitting from growing investor’s interest in crypto assets. The crypto mining operations are handled by SOS Information Technology (SOS) which is a subsidiary of SOS Limited. Earlier in February the Company announced acquisition of 5000 crypto mining machines while almost 2 weeks ago it announced the launching of cloud crypto center established in Hejian County.
However, as much of a hype and rally these crypto-aspirated news carried, they were criticized heavily by investigative research firms like Hindenburg and Culper Research for their authenticity.
Fake pictures of SOS Ltd’s mining operations
News about the company’s mining activities have started to question company’s authenticity.The tide of selling-off can most probably be set in motion by the increased amount of claims of fraudulent activity by investment research firms like Hindenburg Research and Culper Research. After which now follows an investigation into these claims by shareholder attorneys Hagens Berman.
SOS limited fought back by issuing a statement on its website regarding these claims being false accusations only to be made for the economic benefit of the short sellers. However investigative research had led to finding out that the company had posted several fake and dummy photos as well as inaccurate press releases which called out to be misrepresenting and bogus.
Photos posted by SOS Ltd claiming to be pictures of recently acquired A10 Pros were actually identified by the Culper Researchers to be Avalon’s 1066 miners. In fact, the photos belonged to SOS Ltd’s rival RHY’s company photos published on their website. Even the address given on the company’s website for its headquarters was found out by Hidenburg research to be location of a three-star hotel instead.
SOS Ltd needs to defend itself from these claims
The Hidenburg Research and Culper Research claim that SOS is an elaborate “pump and dump” scheme that claimed to have bought 15,000 mining rigs on 21 January only to give doctored photos of the crypto miners. The Hagens Berman partner, Reed Kathrein is heading the investigation for what she states to be “false promotion scheme”. The SOS ADRs have dramatically fallen. Investors now most obviously fear the risk of investing in SOS stock. Many investors are of the view that SOS Ltd should respond to these allegations which has been floating around for a week, if not then many will pull-out of the stock due to fear of these allegations and investigations.