The Chinese crypto mining rig maker Canaan is under the scrutiny of the U.S. SEC as the institution placed Canaan along with 88 other Chinese companies on a pre-delisting list.
According to the filing, the SEC found that Canaan hired an auditor whose working papers cannot be inspected or analyzed fully by the Public Company Accounting Oversight Board (PCAOB).
The Foreign Corporate Accountability Act (HFCAA), which was signed into law in 2021, states that firms that have been on the SEC’s list for three years in a row may be delisted.
The PCAOB is requesting access to audit working materials held in China by New York-listed Chinese firms. Such demands have so far been turned down by China due to national security concerns.
According to the HFCAA, Canaan has until May 25th to file paperwork with the SEC proving that it is not owned or controlled by a foreign government.
Canaan could be delisted from US marketplaces, including over-the-counter trading, if it remains a known issuer for three years in a row.
Canaan noted that “The Company will continue to comply with applicable laws and regulations in both China and the U.S, and strive to maintain its listing status on Nasdaq.”
In 2022, 105 Chinese companies have been added to the list of potential delisting candidates, with 23 of them being confirmed. To avoid delisting, the US and China are debating an audit agreement, with Beijing aiming to finalize one this year.
The United States has always been wary of China’s crypto related activities. In fact, just in March two U.S. Senators introduced the ‘Say No To the SilkRoad Act’ to set new regulations on China’s Digital Currency. The law explains that Digital Yuan is built on blockchain technology and as a consequence, gives China more power over its financial system.