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This case was last updated from PACER on 06/14/2021 at 09:36:24 (UTC).

Denny v. Canaan Inc. et al

Case Summary

On April 15, 2021, Jason Denny individually and on behalf of all others (“Plaintiff”), represented by Samuel Howard Rudman of Robbins Geller Rudman & Dowd LLP (LI), filed a civil action complaint against Canaan Inc., Nangeng Zhang, and Tong He (collectively, “Defendants”), seeking declaratory and monetary relief, for allegedly defrauding the class members and violating the Federal Securities laws. This case was filed in the U.S. District Court for the Southern District of New York with Judge John P. Cronan presiding. 

 

The Plaintiff brings this action as a class action pursuant to Rule 23 of the Federal Rules of Civil Procedure on behalf of all purchasers of Canaan ADRs during the Class Period (the “Class”). Excluded from the Class are defendants.

 

In its complaint, the Plaintiff on behalf of all class members alleged that “Canaan designs, manufactures and sells bitcoin mining machines, primarily in the Peoples Republic of China (the “PRC”). Canaan’s fiscal year 2020 (“FY20”) ended on December 31, 2020. On February 9, 2021, nearly six weeks later, Canaan announced that its former Chief Financial Officer (“CFO”), Quanfu Hong (“Hong”), had suddenly resigned effective immediately, providing no explanation as to why and citing only “personal reasons.” The next day, February 10, 2021, Canaan issued a press release announcing that its “revenue visibility ha[d] improved substantially” and making other positive statements about purported visibility into increases in the size and quality of orders the Company had been receiving. These statements were heralded by the investment community in light of former CFO Hong’s statements on November 30, 2020 that “the demand for mining machines in the market continued to rebound during the third quarter, and” that Canaan had “received a large number of pre-sale orders which [were] scheduled for delivery starting in the fourth quarter of 2020” (“4Q20”). Predictably, the market reacted positively to these statements, driving up the market price of Canaan ADRs from their open of $6.91 each on Monday, February 8th to close at $13.04 each on Friday, February 12th, an increase of nearly 90%.”

 

The Plaintiff further alleged that “Yet the statements Canaan issued during the Class Period about the Company’s business metrics and financial prospects were materially false and misleading in that they concealed that due to ongoing supply chain disruptions and the introduction of the Company’s next-generation A12 series bitcoin mining machines – which had cannibalized sales of the older product offerings. As a result, Canaan’s 4Q20 total net revenues had decreased to RMB38.2 million (US$5.9 million) from RMB463.2 million in the 4Q19 and RMB163.0 million in the 3Q20.”

 

The Plaintiff further alleged that “On Monday, April 12, 2021, before the opening of trading, Canaan issued a press release finally disclosing its actual 4Q20 and FY20 financial results for the period ended December 31, 2020, including a 93% year-over-year decrease in computing power sold and net revenues for the quarter. On this news, the market price of Canaan ADRs collapsed from their close of $18.67 per ADR on April 9, 2021 to close at $13.14 per ADR on April 12, 2021, a decline of nearly 30%, on unusually high volume of approximately 60 million ADRs trading, more than three times the average daily volume over the preceding ten trading days.”

 

There are two claims for relief laid down by the Plaintiff. The first claim is for the alleged violation of §10(b) of the 1934 Act and Rule 10b-5. The second claim is for the alleged violation of §20(a) of the 1934 Act.

 

In its prayer for relief, the Plaintiff has requested the Court to declare this action to be a proper class action, to award damages to members of the Class, including interest, to grant litigation costs, and award such equitable/injunctive or other relief as the Court may deem just.

 

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Case Details Parties Documents Dockets

 

Case Details

  • Case Number:

    1:21-CV-03299

  • Filing Date:

    04/15/2021

  • Case Status:

    Pending - Other Pending

  • Case Type:

    Finance - Security/Commodity/Exchange

  • Court:

    U.S. District Courts

  • Courthouse:

    New York Southern District

Judge Details

Presiding Judge

John P. Cronan

 

Party Details

Plaintiff

Jason Denny

Defendants

Nangeng Zhang

Tong He

Canaan Inc.

Attorney/Law Firm Details

Plaintiff Attorney

Samuel Howard Rudman

Attorney at Robbins Geller Rudman & Dowd LLP (LI)

58 South Service Road, Suite 200

Melville, NY 11747

Defendant Attorneys

Daniel Lucas Cantor

Attorney at O'Melveny & Myers LLP

7 Times Square

New York, NY 10036

Meg Kalikman Lippincott

1926 Manning Ave., Apt. 105

Los Angeles, CA 90025

William Ka Hing Pao

Attorney at O'Melveny & Myers, LLP (LA2)

400 South Hope Street

Los Angeles, CA 90071

 

Court Documents

#10

(#10) NOTICE OF APPEARANCE by Meg Kalikman Lippincott on behalf of Canaan Inc...(Lippincott, Meg) (Entered: 05/04/2021)

#9

(#9) RULE 7.1 CORPORATE DISCLOSURE STATEMENT. No Corporate Parent. Document filed by Canaan Inc...(Cantor, Daniel) (Entered: 05/04/2021)

#8

(#8) NOTICE OF APPEARANCE by Daniel Lucas Cantor on behalf of Canaan Inc...(Cantor, Daniel) (Entered: 05/04/2021)

#7

(#7) STIPULATION AND ORDER TO EXTEND TIME TO RESPOND TO COMPLAINT. IT IS HEREBY STIPULATED, by and between Plaintiff Jason Denny, on the one hand, and Defendant Canaan Inc. ("Canaan"), on the other hand, subject to approval of the Court, as follows: 1. Canaan waives service of the summons and Complaint. 2. Canaan shall not be required to answer, move, or otherwise respond to the Complaint. 3. Within 14 days of the Court appointing a Lead Plaintiff and Lead Counsel, Lead Plaintiff will notify Defendants whether it intends to file an Amended Complaint or designate the existing complaint as the Operative Complaint. Should Lead Plaintiff decide to file an Amended Complaint, it shall be filed within 60 days following the order appointing Lead Plaintiff and Lead Counsel; 4. Canaan shall answer, move, or otherwise respond to the Operative Complaint within 60 days of being notified that Lead Plaintiff will designate the existing complaint as the Operative Complaint or within 60 days of being served with the Amended Complaint; 5. If Canaan moves to dismiss the Operative Complaint (the "Motion"), Lead Plaintiff shall file any opposition (the "Opposition") thereto within 60 days of being served with the Motion. 6. Canaan shall file any replies in support of the Motion within 30 days of being served with the Opposition. SO ORDERED this 3rd day of May, 2021. The Initial Pretrial Conference scheduled for June 24, 2021, at 12:00 p.m. is adjourned sine die. (The following hearing(s) was terminated: Initial Conference.) (Signed by Judge John P. Cronan on 5/3/2021) (rjm) (Entered: 05/04/2021)

#6

(#6) PROPOSED STIPULATION AND ORDER. Document filed by Canaan Inc...(Cantor, Daniel) (Entered: 05/03/2021)

#5

(#5) NOTICE OF ASSIGNMENT: This case has been assigned to the undersigned for all purposes. All counsel must familiarize themselves with the Court's Individual Rules, which are available at https://www.nysd.uscourts.gov/hon-john-p-cronan. Counsel for all parties are hereby ORDERED to appear before the undersigned for an Initial Pretrial Conference ("IPTC") in accordance with Rule 16 of the Federal Rules of Civil Procedure on June 24, 2021 at 12:00 p.m. Unless the Court orders otherwise, the Court will conduct the IPTC by teleconference. At the scheduled time, counsel for all parties should call (866) 434-5269, access code 9176261, and as further set forth in this Order. So ordered. (Initial Conference set for 6/24/2021 at 12:00 PM before Judge John P. Cronan.) (Signed by Judge John P. Cronan on 4/16/2021) (rjm) (Entered: 04/16/2021)

#4

(#4) ELECTRONIC SUMMONS ISSUED as to Canaan Inc., Tong He, Nangeng Zhang..(gp) (Entered: 04/16/2021)

#3

(#3) REQUEST FOR ISSUANCE OF SUMMONS as to Canaan Inc., Nangeng Zhang and Tong He, re: #1 Complaint. Document filed by Jason Denny..(Rudman, Samuel) (Entered: 04/15/2021)

#2

(#2) CIVIL COVER SHEET filed..(Rudman, Samuel) (Entered: 04/15/2021)

#1

(#1) COMPLAINT against Canaan Inc., Tong He, Nangeng Zhang. (Filing Fee $ 402.00, Receipt Number ANYSDC-24403786)Document filed by Jason Denny..(Rudman, Samuel) (Entered: 04/15/2021)

 

Docket Entries

  • 05/11/2021
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  • Docket(#12) ORDER granting #11 Motion for William K. Pao to Appear Pro Hac Vice (HEREBY ORDERED by Judge John P. Cronan)(Text Only Order) (mhe) (Entered: 05/11/2021)

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  • 05/10/2021
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  • Docket>>>NOTICE REGARDING PRO HAC VICE MOTION. Regarding Document No. #11 MOTION for William K. Pao to Appear Pro Hac Vice . Filing fee $ 200.00, receipt number ANYSDC-24517449. Motion and supporting papers to be reviewed by Clerk's Office staff.. The document has been reviewed and there are no deficiencies. (wb) (Entered: 05/10/2021)

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  • 05/10/2021
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  • Docket(#11) MOTION for William K. Pao to Appear Pro Hac Vice . Filing fee $ 200.00, receipt number ANYSDC-24517449. Motion and supporting papers to be reviewed by Clerk's Office staff. Document filed by Canaan Inc.. (Attachments: #1 Declaration of William K. Pao, #2 CA Supreme Court Certificate of Good Standing, #3 Text of Proposed Order on Motion for Admission Pro Hac Vice).(Pao, William) (Entered: 05/10/2021)

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  • 05/04/2021
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  • Docket(#10) NOTICE OF APPEARANCE by Meg Kalikman Lippincott on behalf of Canaan Inc...(Lippincott, Meg) (Entered: 05/04/2021)

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  • 05/04/2021
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  • Docket(#9) RULE 7.1 CORPORATE DISCLOSURE STATEMENT. No Corporate Parent. Document filed by Canaan Inc...(Cantor, Daniel) (Entered: 05/04/2021)

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  • 05/04/2021
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  • Docket(#8) NOTICE OF APPEARANCE by Daniel Lucas Cantor on behalf of Canaan Inc...(Cantor, Daniel) (Entered: 05/04/2021)

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  • 05/04/2021
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  • Docket(#7) STIPULATION AND ORDER TO EXTEND TIME TO RESPOND TO COMPLAINT. IT IS HEREBY STIPULATED, by and between Plaintiff Jason Denny, on the one hand, and Defendant Canaan Inc. ("Canaan"), on the other hand, subject to approval of the Court, as follows: 1. Canaan waives service of the summons and Complaint. 2. Canaan shall not be required to answer, move, or otherwise respond to the Complaint. 3. Within 14 days of the Court appointing a Lead Plaintiff and Lead Counsel, Lead Plaintiff will notify Defendants whether it intends to file an Amended Complaint or designate the existing complaint as the Operative Complaint. Should Lead Plaintiff decide to file an Amended Complaint, it shall be filed within 60 days following the order appointing Lead Plaintiff and Lead Counsel; 4. Canaan shall answer, move, or otherwise respond to the Operative Complaint within 60 days of being notified that Lead Plaintiff will designate the existing complaint as the Operative Complaint or within 60 days of being served with the Amended Complaint; 5. If Canaan moves to dismiss the Operative Complaint (the "Motion"), Lead Plaintiff shall file any opposition (the "Opposition") thereto within 60 days of being served with the Motion. 6. Canaan shall file any replies in support of the Motion within 30 days of being served with the Opposition. SO ORDERED this 3rd day of May, 2021. The Initial Pretrial Conference scheduled for June 24, 2021, at 12:00 p.m. is adjourned sine die. (The following hearing(s) was terminated: Initial Conference.) (Signed by Judge John P. Cronan on 5/3/2021) (rjm) (Entered: 05/04/2021)

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  • 05/03/2021
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  • Docket(#6) PROPOSED STIPULATION AND ORDER. Document filed by Canaan Inc...(Cantor, Daniel) (Entered: 05/03/2021)

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  • 04/16/2021
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  • Docket(#5) NOTICE OF ASSIGNMENT: This case has been assigned to the undersigned for all purposes. All counsel must familiarize themselves with the Court's Individual Rules, which are available at https://www.nysd.uscourts.gov/hon-john-p-cronan. Counsel for all parties are hereby ORDERED to appear before the undersigned for an Initial Pretrial Conference ("IPTC") in accordance with Rule 16 of the Federal Rules of Civil Procedure on June 24, 2021 at 12:00 p.m. Unless the Court orders otherwise, the Court will conduct the IPTC by teleconference. At the scheduled time, counsel for all parties should call (866) 434-5269, access code 9176261, and as further set forth in this Order. So ordered. (Initial Conference set for 6/24/2021 at 12:00 PM before Judge John P. Cronan.) (Signed by Judge John P. Cronan on 4/16/2021) (rjm) (Entered: 04/16/2021)

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  • 04/16/2021
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  • Docket(#4) ELECTRONIC SUMMONS ISSUED as to Canaan Inc., Tong He, Nangeng Zhang..(gp) (Entered: 04/16/2021)

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  • 04/16/2021
  • DocketCase Designated ECF. (gp) (Entered: 04/16/2021)

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  • 04/16/2021
  • DocketMagistrate Judge Stewart D. Aaron is so designated. Pursuant to 28 U.S.C. Section 636(c) and Fed. R. Civ. P. 73(b)(1) parties are notified that they may consent to proceed before a United States Magistrate Judge. Parties who wish to consent may access the necessary form at the following link: #https://nysd.uscourts.gov/sites/default/files/2018-06/AO-3.pdf. (gp) (Entered: 04/16/2021)

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  • 04/16/2021
  • DocketCASE OPENING INITIAL ASSIGNMENT NOTICE: The above-entitled action is assigned to Judge John P. Cronan. Please download and review the Individual Practices of the assigned District Judge, located at #https://nysd.uscourts.gov/judges/district-judges. Attorneys are responsible for providing courtesy copies to judges where their Individual Practices require such. Please download and review the ECF Rules and Instructions, located at #https://nysd.uscourts.gov/rules/ecf-related-instructions..(gp) (Entered: 04/16/2021)

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  • 04/15/2021
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  • Docket(#3) REQUEST FOR ISSUANCE OF SUMMONS as to Canaan Inc., Nangeng Zhang and Tong He, re: #1 Complaint. Document filed by Jason Denny..(Rudman, Samuel) (Entered: 04/15/2021)

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  • 04/15/2021
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  • Docket(#2) CIVIL COVER SHEET filed..(Rudman, Samuel) (Entered: 04/15/2021)

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  • 04/15/2021
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  • Docket(#1) COMPLAINT against Canaan Inc., Tong He, Nangeng Zhang. (Filing Fee $ 402.00, Receipt Number ANYSDC-24403786)Document filed by Jason Denny..(Rudman, Samuel) (Entered: 04/15/2021)

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