China Railway Emergency Response Letter of Inquiry: The reported 4,418 Bitcoins have been sold and related fees have been paid

In response to the “Inquiry Letter” issued by the Shanghai Stock Exchange on August 10, China Railway Emergency (603300.SH) gave a detailed response after 9 days, including the “Zhejiang Huatie Emergency Equipment” in response to the “Inquiry Letter” Science and Technology Co., Ltd. Announcement on Responses to Inquiry Letters Regarding Media Reports, “Special Notes on Financial and Accounting Issues”, “Legal Opinions”, etc.

Affected by the real-name report of EBON.US on August 8, the stock price of China Railway’s emergency secondary market has continued to be sluggish. Since August, China Railway’s emergency share price has fallen by a continuous limit. In the past five days, the stock price has risen 1.79% more steadily.

In the reply letter on August 19, China Railway Emergency gave a detailed explanation of all the inquiries and disclosed the operating performance related to Bitcoin mining leasing.

Detailed disclosure did not show any report by Yibang

On August 8, after Hu Dong, the chairman of Yibang International, reported in real name that Huatie’s emergency suspected financial fraud, suspected serious violations of regulations, and the actual controller Hu Danfeng was suspected of occupational occupation of the “three crimes”, on August 10, the Shanghai Stock Exchange reported Zhejiang Huatie Emergency Equipment Technology Co., Ltd. issued an inquiry letter on media reports. The contents of the inquiry mainly include: about the contract dispute with Yibang International, disclosure of the relationship with Niubo Industry and the company’s actual controller Hu Danfeng, Niubo Whether the industry is to sign and accept the relevant server on behalf of China Railway; about the undisclosed situation of the custody fee of more than 30 million yuan in 2018, an accountant is required to give an opinion; about the actual controller Hu Danfeng and his spouse Pan Qian to open a bitcoin account and use the mining machine purchased by the company After participating in mining, it is necessary for a lawyer to express opinions.

In response to the above-mentioned inquiries, China Railway urgently responded in detail.

On August 17, Grant Thornton Certified Public Accountants (Special General Partnership) gave a detailed response to the custody fee for item 2 of the inquiry letter. After verification, the Huatie Emergency Atomic Company Xinjiang Huatie Hengan Construction Safety Technology Co., Ltd. (later renamed Zhejiang Qirui Machinery Equipment Co., Ltd., hereinafter referred to as Huatie Hengan Company) paid a total of 54.637 million yuan to the custodian in 2018. Among them, 51,081,300 yuan was paid to Beijing Borui Space-Time Communication and Culture Co., Ltd., 1,26 million yuan was paid to Lixian Youdu Technology Co., Ltd., and 2,296,600 yuan was paid to Shihezi Tianding Cloud Network Technology Co., Ltd., which was consistent with the amount in the media report.

The accountant verified the server custody contract, custody period, unit price and statement, etc., and there was no under-calculation of custody fees.

On August 18, Guohao Lawyers (Hangzhou) Law Firm issued a legal opinion in response to the third question of the “Inquiry Letter”, “On the issue of occupational occupation”. After law firms through interviews with Hu Danfeng and Panqian of landing BTC .com web site is Panqian phone number verification does not exist, and make sure not Bitcoin wallet registration number but Bitcoin mining pool account, and Pan Qian Hu Danfeng e-mail The content and bank flow and other verification methods have not found that Hu Danfeng and Pan Qian have violated the interests of the listed company by embezzling the listed company’s Bitcoin. He also emphasized that Bitcoin, as a virtual encrypted digital currency, has good anonymity and limited means of verification.

On August 19, in response to the “Inquiry Letter” item 1 “Contract dispute with Ebang International”, China Railway said in an emergency that in May 2018, Zhejiang Qirui Machinery Equipment Co., Ltd. (formerly known as Xinjiang Huatie Hengan Construction Safety Technology Co., Ltd. The company, hereinafter referred to as “Huatie Hengan”) signed a product sales contract with Yibang Technology, which agreed: Huatie Hengan (Party A) will purchase 80,000 cloud computing servers from Yibang Technology (Party B) for a total price of RMB 403.2 million. . Huatie received 24,000 mining machines in an emergency and leased it out. However, due to the drop in bitcoin prices and the power consumption of the mining machines delivered by Ebang Technology, compared with similar products in the market, Huatie Hengan suffered a serious loss and decided not to perform the contract in June. , The payment for 24,000 mining machines has been paid to Yibang Technology in 4 installments, which is about 120.96 million yuan. The remaining 56,000 mining machines were signed by Niubo Industrial Chen Baoqing.

And are these 56,000 mining machines signed for by Niubo Industrial instead of Huatie Hengan? During the incident, Hu Danfeng’s sister Hu Yueting did not hold any position in Niuber Industries, and there was no capital exchange. An interview with Chen Baoqing from Niubo Industrial confirmed that it was indeed signed by Niubo Industrial, and there was no such case.

So far, China Railway Emergency Response has responded to the “Inquiry Letter” of the Shanghai Stock Exchange and disclosed relevant data.

Operating Bitcoin mining leases have higher profits

Huatie disclosed in an emergency that Huatie Hengan’s bitcoin mining machine leasing business operations were mainly concentrated in the second half of 2018, with a gross profit margin of 19.29%. Huatie Hengan has adopted a combination of pure leasing and leasing plus trusteeship in actual operations.

Among them, the pure lease model income was 16,223245.80 yuan, the net profit was 23.54% yuan, the lease and custody model income was 24,068,551.40 yuan, and the net profit was 7.28%. Huatie Hengan’s actual operating gross profit margin from June 2018 to December 2018 was 19.29%.

The “4418.895748 bitcoins” in the report materials of Ebon International have been sold by the operator from June 2018 to February 2019 for related expenses. The 5 Bitcoin addresses posted online were opened by Chen Baoqing.

During the operation period, the lessees of mining machines include Shanghai Xinding Metal Materials Co., Ltd., Xiangyin Xiangyitong Cloud Storage Network Technology Co., Ltd., and Yiyang Xiangyitong Cloud Storage Network Technology Co., Ltd., with a total of 36,500.00 units leased.

The contract agreed that the settlement income was RMB 101,779,800 and the final settlement amount was RMB 61.48 million. The difference was RMB 40,299,800. The operating income of Huatie Hengan’s leasing business finally totaled RMB 53 million. Since August 2018, due to factors such as the decline in bitcoin prices and the backward computing power of mining machines, the lessee’s mining revenue cannot cover costs such as rent. After negotiation between the two parties, a sales discount will be given on the basis of the settlement price agreed in the contract. Based on the actual situation, the company made provision for impairment of fixed assets of China Railway Hengan 2018 by RMB 142.5501 million.

Regarding the equity transfer of Huatie Hengan, Huatie disclosed in an emergency that the company held the eighteenth meeting of the third board of directors on March 26, 2019 and agreed to transfer 100% of the equity of the target company held by the company and Hangzhou Yuming to Chen Wanlong. Sir. The book net assets of Huatie Hengan are 12.103 million yuan, and the final transfer price is 12.28 million yuan. There is no low-price transfer of Huatie Hengan shares.

To put it simply, Huatie Hengan purchased a mining machine at a cost of 120.96 million yuan. Under the background of 19.29% of operating profit, because the lessee suffered a loss after leasing, Huatie Hengan reduced and exempted related expenses of 40,299,800 yuan, and the final mining operating income was 53 million yuan, a large loss. One is that the number of leased mining machines is less than 24,000, and the other is to reduce or exempt the lessee’s fees. Based on various reasons, an impairment of 142.5501 million yuan eventually occurred.

China Railway urgently admitted that from 2015 to 2018, the company continued to explore new development directions to avoid the uncertainty brought about by fluctuations in the new construction market demand. Combining with the rising popularity of the Bitcoin market at that time and the company’s many years of leasing management experience, the company decided to expand the Bitcoin “mining machine” leasing business. Due to the company’s insufficient understanding of Bitcoin and insufficient due diligence, it failed to fully analyze the high risks of the mining machine leasing business, resulting in serious losses in the mining machine leasing business in the subsequent operation process. In 2019, the company successively divested the bitcoin “mining machine” leasing business and financial leasing, commercial factoring and other financial businesses.

According to a previous report by China Times, on August 15, the scheduled press conference of Ebang International was finally cancelled after it was suspected that the relevant regulatory authorities intervened and was repeatedly postponed. Will the “mining machine door” turmoil of Huatie’s emergency and Ebon International’s “mining machine door” come to an end with the reply letter of the Shanghai Stock Exchange’s inquiry letter issued by Huatie’s emergency?

 

 

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