Diginex Ltd is a company mainly engaged in the provision of digital asset financial services and advisory. The Company mainly engages in delivering products, architectures, and infrastructures the digital asset class. The Company’s businesses include cryptocurrency exchange EQUOS.io, over-the-counter (OTC) trading operation, front-to-back integrated trading platform Diginex Access, hot and cold custodian Digivault and asset manager Bletchley Park Asset Management (BPAM).
The company listed on the NASDAQ in October 2020. Diginex’s back-door listing came through a merger with a special-purpose acquisition company (SPAC) called 8i. After raising private capital and redeeming shares of the SPAC, the company had US$50 million in capital. An additional share offering in January 2021 raised another US$38.58M.
April 15, 2021 Iceberg Research released a report "DIGINEX Ltd ($EQOS): A Crypto Zero". Iceberg believed that due to Diginex’s mission impossible plan for growth, miniscule revenues, dubious history of transactions, and along with its high cash burn, Diginex would struggle to survive. The issues that Iceberg uncovered in its research to back up this were:
- Diginex’s key product was its crypto-exchange Equos. The exchange was ranked 296 out of 306 and competed against larger and well-funded exchanges.
- The company was trying to differentiate Equos as a secure and reliable platform catering to institutional investors. However, Diginex’s dubious transaction history, accusations of selling assets without a controlling shareholder’s authorisation, and other corporate governance red flags clearly said otherwise.
- After launching multiple business lines, Diginex generated minimal revenue of $23.1k for the 1H21 end-September period. The company reported a net loss of $108m for the same period. Iceberg expected Diginex to be able to operate for 18 months based on cash burn of $32m over the previous 12 months (LTM) and pro-forma cash of $47.6m.
- Founder Miles Pelham has sold almost all his shares.
Iceberg concluded saying it was short on Diginex and expected its share price to quickly and substantially decline.