Abaxx Technologies Inc. is calling on Canadian market regulators to investigate whether manipulative trading occurred in its shares, and has retained law firm Paul Weiss to assist in responding to a short-selling campaign by Viceroy Research.
The Toronto-based market infrastructure company said Sunday it has contacted the Canadian Investment Regulatory Organization (CIRO) to request a review of trading activity in its stock by Viceroy and other parties. Abaxx also said its Singapore business proactively contacted the Monetary Authority of Singapore regarding allegations made by the short seller.
Viceroy's Allegations
The move follows a report by Viceroy, which disclosed a short position in Abaxx and argued that the company's exchange appears busier than it really is. The research firm said much of the trading volume on the Abaxx Exchange is “sustained by management incentives,” rather than by commercial customers.
Viceroy pointed to low open interest, trades that appear to offset one another, and spikes in activity around investor events and company announcements. The firm also questioned Abaxx's technology, arguing that key parts of its business rely on software from outside vendors rather than proprietary infrastructure. It criticized the Canadian company's use of high-profile industry figures in investor communications, including former Goldman Sachs commodities chief Jeff Currie, saying their roles may be less significant than investors perceive.
Market Impact and Abaxx's Response
Shares of Abaxx have fallen 25 per cent since June 10, the day before Viceroy disclosed its short position, giving the company a market capitalization of $1.3 billion. Viceroy didn’t comment Sunday on Abaxx’s move to contact regulators.
Abaxx rejected the allegations, calling them false, defamatory, and part of a “short-and-distort” campaign designed to profit from a decline in its share price. The company said neither it nor any of its subsidiaries is under investigation by any regulator, and said “wash trading” is prohibited under the exchange’s rulebook and monitored through a market-surveillance program.
Financial Reassurance
The company also sought to reassure investors about its finances and operations, saying it has enough cash to fund roughly seven quarters of operations without needing to raise money. Abaxx said June trading activity has continued to increase, with average daily volume rising 12 per cent from May and open interest climbing more than threefold.
