Hall of Shame

Information Technology

Ideanomics Inc (IDEX US)

Year: 2020

Ideanomics Inc. is focused on facilitating the adoption of commercial electric vehicles and developing financial services and fintech products. The Company’s electric vehicle division, Mobile Energy Global (MEG) provides group purchasing discounts on commercial electric vehicles, electric vehicle (EV) batteries and electricity as well as financing and charging solutions. The Company’s Capital division includes Delaware Board of Trade (DBOT), which is a broker dealer that also operates an Alternative Trading System (ATS) focused on the trading of traditional OTC securities, and Intelligenta provides financial services solutions powered by artificial intelligence (AI) and blockchain. Intelligenta offers its AI services for the creation of financial products, risk ratings and indexing, and selection and recommendation systems on behalf of key stakeholders.

In January 2004, Alpha Nutraceuticals (ANUI), now Ideanomics, listed in the US via a reverse merger with Sierra-Rockies Corporation (SIRK) 

January 2005, Alpha Nutraceuticals changed its name to Alpha Nutra, Inc (APNA).

April 2007, Acquired Jinan Broadband and changed the company name to China Broadband Inc. (CBBD).

February 2011 Changed its name to YOU On Demand Holdings, Inc. (YOD)

October 2012 A Share Offering raised US$2.70M.

October 2016 Changed its name to Wecast Network, Inc. (WCST)

June 2017 Name changed to Seven Stars Cloud Group, Inc. (SSC)

October 2018 Name changed to Ideanomics Inc.

J-Capital Research
June 25, 2020 J-Capital Research (J-Cap) issued a report on Ideanomics; "Champion of Promotes". In the report, J-Cap said that Ideanomics had a history of promoting business, pumping the stock and then the business fizzles out and are written down with loses to the shareholders.  It's latest business that was promoting was the sales of Electric Vehicles (EVs).  In its report it raised the following:

  • Ideanomics promotion announced contracts with five companies; however when J-Cap contacted these companies, they denied any contracts existed.
  • Ideanomics, announced it was creating a showroom of 1M sqf with a JV in Qingdao.  J-Cap could not identify the showroom and contacted the JV and they had never heard of Ideanomics.
  • Since 2014, the company had changed business models numerous times; Broadband  Video on Demand → Oil and electronics trading → Fintech Ecosystems →  Cryptocurrency → EV business.  
  • Since 2016, IDEX had burned through $53.7M in operating cash flows, most of which had been spent on money-losing investments. The company had an accumulated deficit of $248.5M.
  • Ideanomics Auditors, BF Borgers CPA PC, one office in the USA and no affiliated in China. Also a questionable record with previous clients. Previous auditors had not stayed long;  Grant Thornton lasting one year and refusing to sign 2017 10K. KPMG lasted 3 months.
  • Questionable acquisition strategy.

In summary, J-Cap says the company changed its name and promotional story so frequently that it was hard to keep up. One thing remained a constant, despite all the press releases, buzzwords and hype: shareholders get wiped out.   That the run-up in the share price was nothing more than a well-timed pump. The shelf registration announced June 23 was a desperate attempt to raise money, since the company had less than three months of cash in the bank.

Hindenburg Research
June 25, 2020. The same day as the J-Cap report, Hindenburg Research issued its research on Ideanomics in a series of tweets.  The issued covered in the research were:

  • Ideanomics had a history of changing biz models and pumping - then dumping - each new endeavour. Its move into EVs would be no different
  • From 2015 to 2020, Ideanomics has had 6 CEOs, 6 CFOs, four different company names, and has had 10 board members leave.
  • The Company's June 9 press release includes a photo that bears a "2020" timestamp. Hindenburg found a photo displaying the exact same cars and exact same layout from 2018, years before the supposed soft launch of Ideanomics's MEG center in 2020,
  • The company doctored photos in its PR to suggest it owns/operates the facility,
  • The facility was actually operated by almost 100 sales groups. None of those, Hindenburg spoke with, had heard of Ideanomics or MEG.
  • Hindenburg had its investigator call five of Ideanomics's purported customers that were helping drive its supposed EV business. None of them were aware of Ideanomics and none were able to confirm doing business with Ideanomics.

In conclusion, Hindenburg said it had watched Ideanomics's stock pump and dump on a never ending stream of press releases over the previous 5 years and it expected this time would be no different, resulting in major shareholder losses or regulatory intervention.

June 26, 2020 Ideanomics issued a statement regarding short-selling activities. The Company refuted entirely the claims that it had less than three months operating cash. On the contrary, the Company said it had sufficient cash to maintain its current operations for at least 12 months. It also said that the short-sellers communications did not accurately reflect the operations of Ideanomics.  It also issued a clarification notice on the opening of its EV Hub in Qingdao.

June 26, 2020 Hindenburg issued a rebuttal to Ideanomics statement; "Ideanomics Walks Back 1m Sq Ft Claims Today; Our Visit To IDEX’s “MEG” Facility Shows Zero Company Presence."  Ideanomics, in their statement, had included drone footage of the outside of the entire facility. Hindenburg thought the reason the company wasn’t posting video from inside the facility was because such video showed they had absolutely no presence on site whatsoever.  So in response, Hindenburg posted its video of the inside of the “MEG” center, which was actually called the Qingdao Fidelity International Trade City, which showed only few cars for sale, and no sign of the company on site.  In short, Hindenburg believed the company had fabricated its supposed sales center, and altered images in its press releases to make it seem that it operated the facility.  Hindenburg continued to believe that the company was engaged in flagrant securities fraud and that it’s stock would wind up in the pennies or halted by regulators.

June 29, 2020 Ideanomics responded to short-selling accusations. It said that included facts that refutes claims made by Short-Selling Companies.


J-Capital: Ideanomics - Champion Stock Promote, 25 Jun 2020
Hindenburg: Ideanomics - Twitter Posts, 25 Jun 2020
Ideanomics: Statement Regarding Short Selling Activities, 26 Jun 2020
Hindenburg: Ideanomics Walks Back 1m Sq Ft Claims Today, Our Visit Shows Zero, 26 Jun 2020
Ideanomics: Response to Short-Selling Accusations, 29 Jun 2020
Ideanomics: Annual Report YE Dec. 2019
Ideanomics: Annual Report YE Dec. 2018


 


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