The China-based Zhongchang Big Data’s executive Li Qunnan is embroiled in embezzlement charges for misappropriating 53.55M yuan, approximately US$8 million from the company to purchase Bitcoin mining rigs and pay for hosting services in 2021.
In its filings to the Shanghai Stock Exchange’s supervisory work letter dated May 14, the company stated that funds intended for the company’s activities were misappropriated for other purposes.
On June 2nd, the company announced that a prosecutor in Beijing had approved director Li Qunnan’s arrest. Li Qunnan has since fled the country as he was charged criminally for the fraud he committed.
The firm spent 27.812 million yuan on servers from January to September 2021, which did not constitute assets on the company’s records or in fact.
The company examined the purchase contract for such assets and discovered that the items purchased were a Whatsminer mining machine (model M31S-76T44W) and a supercomputing server (model S10Pro), both of which are now popular Bitcoin mining rigs.
The corporation spent 25.243 million yuan to host the mining machines stated above. It feels that bitcoin mining machines cannot be employed in its business operations, and that it does not need to purchase large-scale servers to support its daily operations.
Li Qunnan made a statement to the listed company’s board of directors, board of supervisors, and other senior executives in 2022, claiming that he did not misappropriate funds for the purpose of unlawful possession.
The corporation thinks, however, that the declaration document’s official seal has been forged. Li Qunnan is suspected of secretly engraving the official seal and falsifying or modifying company records.
According to Zhongchang Data, Li Qunnan has constantly refused to assist with public security inquiries and investigations.
During Li Qunnan’s tenure, the procuratorial organs will determine the illegal facts and the amount involved in the case, and the court will render a final decision.
Per its 2021 annual report, Zhongchang Big Data had a financial loss of 472.1 million yuan (US$71 million) in 2021, down from a net profit of 9.5 million yuan (US$1.4 million) in 2020.
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The Shanghai Stock Exchange issued a delisting risk alert to the company in May, requiring it to add a “*ST” tag to its stock code to alert investors to its financial trouble and legal concerns.
