Chinese Tech Firm Probed Over Launch of Crypto-Mining Video Console
Leshi Internet, a Chinese video streaming provider with a history of financial troubles, is being questioned by the Shenzhen Stock Exchange over its subsidiary’s move into the crypto space.
Lerong Zhixin, a smart TV maker owned by Shenzhen-listed Leishi, announced a plan on Wednesday to partner with a blockchain startup to launch a video streaming console that can be used to mine cryptocurrency.
At a launch event this week, the subsidiary claimed that, since the new product integrates a distributed network, users will be rewarded with tokens by allowing their idle broadband to be shared with other users connected to the blockchain.
Following the announcement, the Shenzhen Stock Exchange – which is administrated by China’s Securities Regulatory Commission – sent Leshi a formal enquiry on Friday, demanding details about the firm’s blockchain resources and manpower, as well as its partner’s technical capacity.
The exchange also challenged the firm over potential regulatory issues regarding the process of cryptocurrency mining in China.
Where the questions are leading, effectively, is to ascertain if Leshi indeed has the technology to deliver the promised product or it is taking advantage of blockchain hype to boost its stock price.
Since the initial announcement, Leshi’s share price increased by as much as 5 percent over the last two days.
Although the gain may not be as notable as previous similar cases of firms seeing stock spikes after pivots to blockchain, the news comes at a time when Leshi is regaining its financial health after years of debt and financial troubles.
Launched in 2004 as a video streaming service, Leshi made a series of attempts to expand over the past few years in order to compete with international streaming giants like Netflix. It was later reported to be in financial deep water by media outlets in China and elsewhere, after which its share price declined from as high as $26 in 2015 to around $0.50 at the moment.
In September 2017, Leshi’s founder and its holding company LeEco were put on a a credit blacklist by regulators in China, public data shows. A local court in Beijing reportedly seized millions of dollars-worth of Leshi shares in December.
Video streaming image via Shutterstock