logo
The $480 Million Scam Playbook: Chinese Microcap IPOs Are Bleeding U.S. Investors

The $480 Million Scam Playbook: Chinese Microcap IPOs Are Bleeding U.S. Investors

Yahoo16-06-2025
A growing number of U.S. investors are getting caught in what looks like the perfect setup for fraudsmall Chinese companies like Jayud Global Logistics (NASDAQ:JYD) and China Liberal Education (CLEUF) going public on Nasdaq, only to crash in spectacular fashion weeks later. What starts as a convincing ad on Facebook or WhatsApp quickly turns into a pump-and-dump operation. Investors like Utah-based college professor Braden Lindstrom were encouraged by supposed financial "advisers" to buy into these obscure names, only to watch their life savings vanish. Jayud, for example, spiked to $8 in April before plummeting below $1just after retail interest peaked. One commercial property manager in California lost $320,000. A support group of nearly 100 victims says their total losses top $9 million.
Warning! GuruFocus has detected 7 Warning Signs with JYD.
The playbook? Simple. A company raises funds from private investorsChina Liberal raised $21 million from 30 insidersthen shares move quietly to U.S. brokerages. Promoters hype the stock online, targeting individuals with promises of a "sure thing." After the shares are dumped, prices crash. In China Liberal's case, seven traders from Malaysia and Taiwan were charged after allegedly unloading over 50 million shares for $480 million in profit. The DOJ seized $214 million, and trading in the stock was halted by Nasdaq on June 3. Meanwhile, NetClass rode the same waveits shares soared from $5 to $51 before collapsing to just above $2.
Regulators are under pressure. Finra had already warned back in 2022 that many of these ultra-small IPOsoften raising less than $15 millionshowed signs of manipulative trading. Nasdaq has since sped up delistings for companies trading under $1. But even with stricter rules, these schemes continue. The Justice Department has now prioritized tackling this fraud, while Meta says it's testing tools to block deceptive stock ads. Still, the damage is done. As trader Nathan Michaud put it, these setups are dangerous even for short sellersbecause once the squeeze starts, even the bears can get buried.
This article first appeared on GuruFocus.
Orange background

Try Our AI Features

Explore what Daily8 AI can do for you:

Comments

No comments yet...

Related Articles

Will Stripe SPAC or IPO in 2025?
Will Stripe SPAC or IPO in 2025?

Yahoo

timean hour ago

  • Yahoo

Will Stripe SPAC or IPO in 2025?

Key Points Webull, Chime, and Circle Internet Group are some popular fintech companies that went public during the past year. In addition, SoFi Technologies and Robinhood Markets have emerged as leading fintech stocks over incumbents such as Block or PayPal. Although Stripe is a highly coveted private company, investors are curious if the company will become the next hot fintech IPO. 10 stocks we like better than SoFi Technologies › During the past several years, a number of technology-driven companies have burst onto the scene in search of disrupting the financial services industry. Amid a flurry of public offerings from the likes of Webull, Chime, Circle Internet Group, Robinhood Markets, and SoFi Technologies (NASDAQ: SOFI), financial services unicorn Stripe has remained a private company. But with a reported valuation of $91.5 billion, Stripe exceeds the market capitalizations of incumbent fintech businesses such as PayPal and Block by a considerable margin. Let's dig into the paths that competing fintech companies took to public exchanges in recent years. From there, I'll outline some factors that may weigh on Stripe's decision to pursue a public offering in the near future. How do companies go public? During a traditional initial public offering (IPO) process, a company will engage a number of investment banking firms such as Goldman Sachs, Morgan Stanley, or JPMorgan Chase to assist with the underwriting process. Banks put together detailed documentation covering the company's historical financial profile, key performance indicators (KPIs), and risk factors around the business. This information is packaged in a regulatory filing known as an S-1 made with the Securities and Exchange Commission (SEC). From there, banks and executives conduct a roadshow during which they market and pitch the IPO offering to institutional investors and wealth management firms. This process helps gauge investor interest and how the offering should be priced. Another way to list on the public exchanges is through a special purpose acquisition company (SPAC). SPACs are colloquially referred to as "blank check companies" on Wall Street. Essentially, a sponsor will take a shell company public to raise capital. From there, the goal is to use those funds to merge with a private company and take it public . SPACs can be attractive for businesses as they typically offer a faster route to going public compared to traditional underwriting protocols led by investment banks. For investors, SPAC mergers may be more accessible than traditional IPO companies -- where allocations are generally first reserved for institutional investors. How have fintech offerings fared in recent years? Although SPACs may sound appealing as they can provide investors with access to popular start-ups in hot industries more easily than a traditional IPO, there are some important points to consider about these companies. According to a SPAC study conducted at the University of Florida, one-year de-SPAC (the transition period after a merger announcement) returns averaged negative 46.3% between 2012 and 2022. The average three-year return was even worse, posting a return of negative 57.7%. When it comes to industry-specific metrics, the median de-SPAC returns between 2009 and 2025 for crypto companies was negative 66% while broader financial services companies returned negative 6%. No matter which way you cut it, SPACs in the fintech realm have been largely underwhelming. By contrast, since Robinhood went public back in 2021 using the traditional IPO process, the shares have surged by 192% -- handily topping the 48% return from the S&P 500. Both Circle and Chime completed IPOs about a month ago and have posted mixed returns so far. While Circle stock went to the moon initially, it has since pulled back considerably (yet still trades much higher than its IPO price). Chime's action has been relatively muted, likely due to investors realizing that competing neobank SoFi is much larger and more profitable -- calling into question Chime's growth prospects. Should Stripe go public in 2025? Overall, I think the results have largely been mixed for public offerings in the fintech sector in recent years. I think a big reason for this performance is that despite impressive growth and differentiated product offerings, questions remain over how neobanks and new brokerage platforms can really compete and disrupt industry incumbents. In addition, I think Stripe is likely weighing how macro factors such as potential changes to Federal Reserve monetary policy could affect its own business results, sentiment across the broader capital markets, valuations, and appetites for public offerings. Whether Stripe should go public really hinges on the company's needs and whether it makes sense from a strategic and operational perspective. Should you buy stock in SoFi Technologies right now? Before you buy stock in SoFi Technologies, consider this: The Motley Fool Stock Advisor analyst team just identified what they believe are the for investors to buy now… and SoFi Technologies wasn't one of them. The 10 stocks that made the cut could produce monster returns in the coming years. Consider when Netflix made this list on December 17, 2004... if you invested $1,000 at the time of our recommendation, you'd have $636,774!* Or when Nvidia made this list on April 15, 2005... if you invested $1,000 at the time of our recommendation, you'd have $1,064,942!* Now, it's worth noting Stock Advisor's total average return is 1,040% — a market-crushing outperformance compared to 182% for the S&P 500. Don't miss out on the latest top 10 list, available when you join Stock Advisor. See the 10 stocks » *Stock Advisor returns as of July 21, 2025 JPMorgan Chase is an advertising partner of Motley Fool Money. Adam Spatacco has positions in SoFi Technologies. The Motley Fool has positions in and recommends Block, Goldman Sachs Group, JPMorgan Chase, and PayPal. The Motley Fool recommends the following options: long January 2027 $42.50 calls on PayPal and short September 2025 $77.50 calls on PayPal. The Motley Fool has a disclosure policy. Will Stripe SPAC or IPO in 2025? was originally published by The Motley Fool Error in retrieving data Sign in to access your portfolio Error in retrieving data Error in retrieving data Error in retrieving data Error in retrieving data

Here are 3 ways to think about Nvidia stock
Here are 3 ways to think about Nvidia stock

Yahoo

timean hour ago

  • Yahoo

Here are 3 ways to think about Nvidia stock

Fortunes have been made by many, thanks to investing in chip giant Nvidia (NASDAQ: NVDA). Nvidia stock has soared 1,576% over the past five years. It is now the most valuable listed company in the world. I continue to weigh my options when it comes to investing. I would be happy to own Nvidia stock in my portfolio — but I am not willing to pay the current price. In making my decisions, I have been trying to think about the share from different perspectives. Here are three of them. Like Amazon before the dotcom crash Artificial intelligence (AI) has some signs of being a stock market bubble. If that bubble bursts, for example because computing power progress means future chip demand is much less than expected, it would likely have a big impact on Nvidia. That helps explain why I am nervous about buying at the current Nvidia stock price. If it falls down I would then be nursing a paper loss, perhaps a sizeable one. Then again, Amazon fell 94% between the dotcom boom of November 1999 and September 2001. Still, since then it has gone up 76,600%. As a long-term investor, I do not mind sitting on a paper loss (even a sizeable one) if I continue to believe in the long-term investment case for a share. But while Amazon in 1999 could be an interesting comparison for Nvidia stock today, there is no guarantee latter would bounce back the way the former did. Amazon's market grew significantly. The market for AI chips may keep growing fast – but it could also be that after initial installations are complete, demand falls. A bubble waiting to burst? That leads me onto another potential way to view Nvidia stock: as a massive bubble waiting to burst. After all, the price-to-earnings (P/E) ratio is 56. That is higher than I would be willing to pay, though large tech stocks often do command high P/E ratios. But earnings have exploded at Nvidia in recent years. Last year's basic earnings per share of $2.97 were far more than double the prior year's $1.21 – and around 25 times higher than just five years previously. If the surging demand for AI chips turns out to be a blip rather than a long-term trend, Nvidia's eanings could come crashing back to earth. In such a scenario, even if Nvidia remained solidly profitable, its stock price may move far below where it currently stands. This is the risk that most puts me off investing at the current share price. Success story set to grow A third scenario could be that Nvidia might be like Microsoft or Apple at multiple points in their history – massively successful yet set to grow further, boosting an already costly-looking share price. Apple stock is up 131% in the past five years. But five years ago, Apple was already massively successful and one of the biggest companies on the market. Nvidia's proprietary technology, large customer base and proven business model have brought it a long way in a few years. Maybe it can do the same again over the next few years. The post Here are 3 ways to think about Nvidia stock appeared first on The Motley Fool UK. More reading 5 Stocks For Trying To Build Wealth After 50 One Top Growth Stock from the Motley Fool C Ruane has no position in any of the shares mentioned. The Motley Fool UK has recommended Amazon, Apple, Microsoft, and Nvidia. Views expressed on the companies mentioned in this article are those of the writer and therefore may differ from the official recommendations we make in our subscription services such as Share Advisor, Hidden Winners and Pro. Here at The Motley Fool we believe that considering a diverse range of insights makes us better investors. Motley Fool UK 2025

AI-fueled crypto scams are booming, up 456% — and no one is safe, expert warns
AI-fueled crypto scams are booming, up 456% — and no one is safe, expert warns

New York Post

timean hour ago

  • New York Post

AI-fueled crypto scams are booming, up 456% — and no one is safe, expert warns

Crypto crooks are getting bolder — and now, they sound just like your mom. Global crypto scams soared 456% between May 2024 and April 2025 — becoming increasingly reliant on AI-generated voices, deepfake videos and phony credentials to fleece unsuspecting victims, blockchain intelligence firm TRM Labs' Ari Redbord told The Post after testifying before Congress last Tuesday. 'These scams are highly effective, as the technology feels incredibly real and familiar to the victim,' Redbord said. Advertisement 4 TRM Labs' Ari Redbord, who testified before Congress last week, says scammers are now using AI-generated voices and deepfake credentials to mimic loved ones and steal crypto. Igor Faun – 'We've seen cases where scammers use AI to replicate the voice of a loved one, tricking the victim into transferring money under the guise of an urgent request.' And the threat is exploding — especially in high-density cities like New York, Miami and Los Angeles, he added. In June, New York officials froze $300,000 in stolen cryptocurrency and seized more than 100 scam websites linked to a Vietnam-based ring that targeted Russian-speaking Brooklynites with fake Facebook investment ads. Advertisement Meta shut down over 700 Facebook accounts tied to the scam. Investigators say the group used deepfake BitLicense certificates and moved victims onto encrypted apps like Telegram before draining their wallets. 4 Even crypto pros aren't safe — MoonPay's CEO and CFO were conned into wiring $250,000 to a scammer pretending to be a Trump inauguration insider. Igor Faun – Advertisement Some New Yorkers lost hundreds of thousands of dollars — and it's not just everyday joes getting targeted. Even crypto insiders are falling for it. Florida-based crypto firm MoonPay saw its CEO Ivan Soto-Wright and CFO Mouna Ammari Siala duped into wiring $250,000 in crypto to a scammer posing as Trump inauguration co-chair Steve Witkoff, according to a recent Department of Justice complaint. And that's just the tip of the iceberg. Globally, fraudsters swiped more than $10.7 billion in 2024 through crypto cons — including romance scams, fake trading platforms and 'pig-butchering,' where scammers build fake relationships before draining victims' accounts, Redbord said. Advertisement In the US, Americans filed nearly 150,000 crypto-related fraud complaints in 2024, with losses topping $3.9 billion, according to the FBI. But the real number is likely much higher. 4 A Vietnam-based ring targeted Brooklyn's Russian-speaking community with fake BitLicenses and phony Facebook accounts before vanishing with hundreds of thousands. Igor Faun – 'Only around 15% of victims actually report these crimes,' Redbord said, citing shame, fear and distrust in law enforcement — particularly among older adults and immigrant communities. One of these scammers go-to tools? Crypto ATMs — especially those tucked inside New York delis and convenience stores. Illicit use at these kiosks is more than twice as high as in the broader crypto market, Redbord said. Victims are often directed to scan a QR code and deposit cash, instantly converting it to crypto before the funds disappear. As the scams rage on, Washington is starting to bring order to the Wild West of crypto. 4 Officials say the real number of crypto scam victims is far higher than reported, as shame and fear keep many from coming forward. Igor Faun – House lawmakers wrapped up 'Crypto Week' last Thursday by passing the first-ever comprehensive cryptocurrency legislation — a trio of bills focused on regulating stablecoins, trading platforms and digital asset infrastructure. Advertisement Even so, Redbord advised, common sense is the best defense. 'If something feels too good to be true — especially unsolicited investment advice — it almost always is,' he said. 'Verify the platform. Confirm identities. And when in doubt, report it — whether to IC3, Chainabuse or your local authorities.'

DOWNLOAD THE APP

Get Started Now: Download the App

Ready to dive into a world of global content with local flavor? Download Daily8 app today from your preferred app store and start exploring.
app-storeplay-store