Investigation of SOS Limited
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SOS Limited (SOS) Misled Investors Regarding the True Nature of its Business
Critical to SOS’s transition into cryptocurrency mining were the Company’s claims to have entered into an agreement with HY International Group New York, Inc., which calls itself the “world’s largest mining machine matchmaker,” to acquire 15,645 mining rigs for $20 million, and the Company’s plans to purchase FXK Technology Corporation, a purported cryptocurrency technology firm. In addition to changing business focus, the Company has changed the location of its headquarters five times since going public in April 2017.
On February 26, 2021, Hindenburg Research and Culper Research released commentary on SOS, claiming the Company was an intricate “pump and dump” scheme that used fake addresses and doctored photos of crypto mining rigs to create an illusion of success. The analysts noted that SOS’s filings listed a hotel room as the Company’s headquarters, asserted that the entity from which SOS purportedly bought the mining rigs appeared to be a fake shell company, and noted that the images from SOS’s website depicting “miners” actually belonged to another company, among other things. On this news, SOS’s ADS price fell $1.27 per share, or 21.03%, to close at $4.77 per ADS on February 26, 2021.
The complaint alleges that throughout the class period, defendants made false and/or misleading statements and/or failed to disclose that: (i) SOS had misrepresented the true nature, location and/or existence of at least one of the principal executive offices listed in its SEC filings; (ii) HY and FXK were undisclosed related parties and/or entities fabricated by the Company; (iii) the Company had misrepresented the type and/or existence of the mining rigs that it claimed to have purchased; and (iv) as a result, the Company’s public statements were materially false and misleading.