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Ideanomics, Inc. ($IDEX) is committed to the development of the green fin-tech revolution and is active in the electric car industry. Based in the United States – but mainly operational in China – the company announced big news in the last couple of years. But since the company knows several fraud cases, the stock has dropped significantly.

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Why Ideanomics got accused of fraud

Last year, Ideanomics proudly published innovative plans for a campus called “Fintech Village,” a major $400 million dollar project that would be fully equipped. Living areas, restaurants, shops, even an art gallery were part of the plan. “Fintech Village will be a unique and special project, such as Connecticut has never seen,” said Ideanomics Chairman Bruno Wu.

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Add to that the “recently” opened sales center in Qingdao, China. The local government would have agreed to a free 15-year lease that would give Ideanomics 100,000 square meters to boost the business and potential of the company. Ideanomics wanted to become the talk of the town, which was going to happen, just not in the way Bruno Wu had hoped.

In June 2020, a remarkable tweet was posted by short-seller Hindenburg Research. It was alleged that the Qingdao sales center wasn’t operational as it had never been in their possession. Photos of Ideanomics were found to match previous Chinese news photos from 2018. The photos are said to have been photoshopped by editing the logo on the building, making it appear as if the sales center is owned by Ideanomics. Fake news seemed born and a veritable witch hunt on the internet began. Shortly afterward, short-seller J Capital Research spoke to alleged clients who claimed to be featured in Ideanomics news stories, while they had nothing to do with the company. According to the short-seller, large agreements and million deals would also be untrue.

How China and Wall Street are connected

It’s not the first record with allegations of fraud against a publicly traded Chinese company trading on the soil of the United States. At the beginning of the 21st century, many Chinese companies entered the American stock exchange thanks to a back door, the well-known “reverse mergers”. Chinese companies would merge with a US shell company and take over the public stock exchange listing, giving them access to US stock exchanges, trade and investors. Long story short, this led to multiple outrageous frauds resulting in the loss of billions of dollars to US investors. What makes it difficult is that the Chinese government is not keen on external whistleblowers, which makes tracking down and prosecuting fraudsters far from easy. Critics from their own country also run the risk of ending up in jail if they threaten to trouble the people with the big money.

Is there a first cloudburst for Ideanomics?

Since the allegations against Ideanomics, there has been little activity on its own website and the plans for the “Fintech Village” campus and the sales center in China seem to have become a thing of the past. Several messages seem to have been removed from the website. The company has many lawsuits and accusations, so many that it was almost impossible to follow. And just when it seems as if everything is above water, a curious story emerges that perhaps puts everything in a different perspective.

With the tensions between the United States and China, you would think that corrupt businessmen would keep quiet for now and spend their money in a tropical tax haven. How different the reality is for the Chinese entrepreneur and billionaire Guo Wengui, who seems indirectly important for the developments of Ideanomics’ market share.

The Chinese billionaire with interesting friends

Guo Wengui – aka Guo Wen Gui, Guo Haoyun, Miles Guo and Miles Kwok – is a Chinese businessman, billionaire, activist but also labelled as a fraudster, troublemaker and potential jailer in China. More than a month ago, his name made headlines after the FBI launched an investigation into his self-funded media projects and ties to Steve Bannon. Guo would have benefited well from the actions of senior Republican officials such as Bannon or public spokesmen. And here is the name of Ideanomics chairman Bruno Wu again. As the two Chinese billionaires don’t really like each other, to say the least.

Guo, who calls himself an activist and calls for corruption reform in China, has sparked a Chinese war with Wu in the heart of Manhattan, New York. Lawsuits are the result of several allegations against Wu and his wife (Chinese media star Yang Lan). It allegedly involved sexual misconduct, rape and murder of children and accused Wu’s wife of prostitution to advance her career. Wu and Lan claim that it isn’t only false accusations. Guo allegedly spies on the family, has intimidated the family by sending bad guys while Wu’s family was visiting a restaurant in New York and later Lan was threatened on social media after Guo indicated that he wanted to harm her both physically and emotionally.

In 2014, Guo fled to New York after several of Guo’s allies were arrested in a fraud case and charged with corruption. Five suspects are said to have told the court that Guo was the mastermind behind a $60 million settlement. Guo himself would later say that his reason for the move had to do with the deteriorating geopolitical relationship between China and the United States. From New York – where he applied for asylum and then spent his life in a penthouse – Guo started a social media campaign to accuse Wu of, among other things, providing information to the Chinese government about his business practices. After two years Guo quits the campaign, because most accounts were blocked by authorities and his campaign had little success. Meanwhile, Guo is said to have strengthened ties with a company that was illegally investigating Chinese citizens – including their bank details, pornography habits and any illegitimate children.

Fed up with the turmoil Guo created, the Chinese government asked the United States for an extradition. Guo was at the mercy of the State Department and Justice Ministry, but an internal conflict arose over Guo’s return to China. As an ally of Steve Bannon and being a very wealthy man, the process did not go as expected. On the other hand, casino mogul Steve Wynn, a longtime confidant of President Donald Trump – with interests in China, is said to have handed over a letter from the Chinese government to the president highlighting Guo’s extradition. Team Trump’s divisions ran high, with former Attorney General Jeff Sessions threatening to resign if Guo was extradited. At the last minute, President Donald Trump decided to refrain from extradition, which raised tensions between the United States and China.

In order to prove that Guo could be useful to the US authorities and reduce the chance of later extradition, he is said to have offered his cyber knowledge and platforms. Shortly afterwards Eastern Profit, a Guo-based Hong Kong company, signed a contract with Strategic Vision US, a private espionage company. Because the agreement was published, we know that it concerns ten people who would be checked for almost everything. An important link in this story who seem to know all is Steve Bannon. The man who shakes hands with president Donald Trump, Guo Wengui and was aware of the company Ideanomics.

Steve Bannon and the rising share of Ideanomics

Steve Bannon – Guo’s companion, American businessman and politician, best known in 2017 as President Donald Trump’s White House Chief Strategist and Senior Counselor. Previously successful businessman, investor, politician and producer of a film starring Anthony Hopkins, his curriculum vitae is endless. Despite its impressive list, Bannon got arrested this week on Guo’s 150-feet-long yacht in Connecticut on suspicion of fraud. Guo and Bannon were previously seen at this location in a Youtube video where the two criticize the Chinese government and discuss the alleged benefits of hydroxychloroquine for the treatment of COVID-19. While the arrest doesn’t provide a direct link to Guo or Ideanomics at first, it appears the two have ties to different companies and business strategies together.

Rumors are now circulating that the aforementioned short-sellers Hindenburg Research and J Capital Research have been paid ($ 2 million dollars) by Guo for the false allegations against Wu and Ideanomics. In this way, Guo would like to put pressure on Wu’s activities in the United States and China, potentially affecting the developments of the charges filed against each other. The same trick is said to have been previously performed by Guo against the company Blink Charging Co. ($BLNK). There is much speculation on Twitter about Bannon’s involvement in this fraud case. Bannon would have known about the situation and therefore made good money through the shares of Ideanomics. The fact that Bannon was arrested on Guo’s yacht does not make this conspiracy any less credible. The reason circulating on the internet why this hasn’t immediately leaked out would be a $100 million ‘Rule Of Law Foundation’ used by Guo to keep this fraud under the radar.

For those investing in the stock, we have seen significant growth since the news of Bannon was announced. A part of the public who are interested in this political fraud case seem to believe Ideanomics and are looking for evidence in this remarkable story to prove otherwise.

To be continued.

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By Omar