Shares of DeFi Technologies (DEFI), a Canadian crypto fund provider, took a hit this week after a report cast doubt on the legitimacy of its recent stock price rise. However, the company is fiercely defending its operations and financial health.
DeFi Technologies, known for its strategic investments in cryptocurrency and blockchain technology, has recently faced scrutiny. While ecosystems similar to The Open Network (TON) see Toncoin (TON) prices fluctuate amidst slower growth, DeFi Technologies' own stock price has experienced significant volatility. A crypto newsletter, CoinSnacks, published an article on Tuesday that raised questions about DEFI's stock surge. The report highlighted a recent marketing campaign and influencer endorsements, suggesting they were behind the price increase rather than any fundamental business growth.
Before the report, DEFI was trading at a high of CAD $3.30. However, it plummeted 35% to CAD $2.24 by the close of Tuesday. CoinSnacks noted DEFI's association with figures like Anthony Pompliano and Will Clemente, whose firm was acquired by DeFi Technologies.
DeFi Technologies responded swiftly, calling the report "inaccurate" and suggesting it might be a tactic by short-sellers aiming to drive down the stock price. They pointed to a recent investment offer of US $15 million, which they considered low in light of their growing treasury, including Bitcoin holdings.
The company further defended its financial performance by highlighting a profitable start to the year. They emphasized increasing assets under management, generating significant revenue, and a net profit of $100 million for the first half of 2024. DeFi Technologies also questioned the report's focus on their 2023 net loss, arguing it doesn't reflect their current trajectory.
Russell Starr, from DeFi Technologies, believes the report ignored the company's strong fundamentals, including growing assets and a profitable trading desk. He suggests the stock's valuation is justified based on these factors.
The back-and-forth between DeFi Technologies and CoinSnacks highlights the complexities of evaluating crypto companies. While the report raises questions about the role of marketing, DeFi Technologies presents a different narrative about its financial health. With the stock price rebounding slightly, the situation remains fluid, and investors will be watching developments closely.
