DeFi Technologies Inc. recently found itself in the spotlight after a report led to a significant drop in its stock price. The exchange-traded product (ETP) provider strongly contested the allegations in the report, labeling it as “defamatory” and “misleading.” This controversy has raised many questions about the integrity of the information and the motivations behind the report.Â
The Report and Its ClaimsÂ
On June 18, the crypto-focused newsletter CoinSnacks published a report that had a major impact on DeFi Technologies’ stock. The report suggested that the company’s stock wasn’t increasing for legitimate reasons. It accused DeFi Technologies of launching questionable email campaigns and using paid crypto influencers to boost its stock price.Â
According to CoinSnacks, DeFi Technologies had seen its stock rise by an astounding 3,400% over the past year. The report further alleged that the company engaged in a high-frequency email campaign, sending 15 emails over ten days to promote its stock. It also mentioned that high-profile crypto figures Anthony Pompliano and Will Clemente, through their joint venture Reflexivity Research, had provided publicity boosts. Reflexivity Research was acquired by DeFi Technologies in January.Â
DeFi Technologies’ ResponseÂ
DeFi Technologies quickly responded with a press release on June 19, dismissing the CoinSnacks report as baseless. They suggested that the report might have been commissioned by short-sellers aiming to depress the stock’s value. Short-selling involves selling borrowed shares with the hope of buying them back at a lower price, thus profiting from the difference.Â
The company’s stock, which had a notable gain earlier in the year, closed at 3.10 Canadian dollars on Monday. However, after the report’s release, it plummeted by nearly 28% to 2.24 Canadian dollars by Tuesday’s close. The stock saw a slight recovery, closing at 2.30 Canadian dollars on Wednesday, June 19.Â
CoinSnacks’ DefenseÂ
In response to the accusations, CoinSnacks defended its report in a post on June 19. They asserted that they had not been paid by any short-sellers to cover DeFi Technologies and that none of their team members held positions in the company’s stock.Â
Potential Market Manipulation ConcernsÂ
DeFi Technologies also highlighted a peculiar incident involving a Canadian investment bank. The company claimed it was approached with an unsolicited offer for a potential bought-deal worth US$15 million. Despite having a strong treasury, DeFi Technologies found the offer unusual. They later discovered that the bank had a history of working for short-sellers and that a hedge fund, unfamiliar with the company, was interested in the deal.Â
This raised suspicions about potential market manipulation. DeFi Technologies reported these concerns to the Canadian Investment Regulatory Organization, warning them about the possibility of a short-seller report influencing the market.Â
| Date | Event | Stock Price (CAD) |
|---|---|---|
| June 18 | CoinSnacks publishes report | 3.10 |
| June 18 | Stock drops nearly 28% | 2.24 |
| June 19 | DeFi Technologies issues press release denying allegations | 2.30 |
| June 19 | CoinSnacks defends report | Not Specified |
ConclusionÂ
The conflict between DeFi Technologies and CoinSnacks highlights the impact of media on stock prices. It also underscores the potential for market manipulation through coordinated efforts. While DeFi Technologies vehemently denies the claims made in the CoinSnacks report, the incident serves as a reminder of the importance of scrutinizing information sources and motivations in the financial markets.Â
Disclaimer
FAQ
DeFI stands for decentralized finance, offering open and accessible financial systems built on blockchain technology.
Yield farming involves earning interest by lending or staking cryptocurrencies.
Layer 1 blockchains are the primary networks (e.g., Ethereum), while layer 2 blockchains scale and improve performance on top of them.
