Is Singularity Future Technology A Scam?

Hindenburg Research published another very detailed research today. This time the target of the research is NASDAQ listed company Singularity Future Technology with a ticker symbol $SGLY. After the publication of this research already in the downtrend stock price of $SGLY drops even more and below $5. I am surprised it hasn't even gone lower. As usual markets don't always follow logic.

Hindenburg Research does a great job in investigating publicly traded company that may have some serious problems, and their research team is good at uncovering not so honest business practices, fraudulent behavior by companies, and attempts to scam investors. Not only Hindenburg Research share their findings with public but they also take short positions once they complete their research.

Every time I read their newest publication, I end up asking the same question - How is it possible for such companies to be listed on major exchanges? Researches like this also point out the flaws in the system. Regulators like SEC are either understaffed, unwilling or not capable of protecting the investors as they claim is their goal every time they go after any company. And they want to regulate crypto? To be fair there is a lot of scams going on in crypto world as well. As long as scams in regulated markets like stocks continue to operate, I have little confidence that regulators can actually do any good regulating crypto.

Singularity Future Technology used to be Sino-global and only recently in 2021 changed its name to Singularity Future Technology. It specialized in a global logistics and ship management services. But recently changed its business to blockchain technologies, AI, and, crypto world. At least that's what their website at sino-global says. There are already red flags. How do you go from a shipping logistics company to a blockchain companies, and why change your name and confuse investors? Not like they came up with an original and interesting name either.

Some of the articles written about the company earlier this year also outline some financial troubles Singularity has been having financial difficulties with debt, losses, and spending of cash. None of them go into detailed research like Hindenburg has done. Hindenburg dedicated a lot of time investigating Singularity's CEO, Yang Jie and half of the research focus is on this individual who has fled China and is alleged to be part of $300 million Ponzi scheme. Yang Jie may or may not have fraudulent background. It is difficult to say, and I would ignore this part of the argument why Singularity may not be a good company to invest.

More interest parts of the research is that the company claims to be in the business of builds crypto miners, have sold many already within a very short period of time. There is no evidence of them selling any mining equipment or making money from such business activities. And the miners they presented they have engineered seems to be the pictures of another already existing miners by some other company. The story gets even more interesting when Hindenburg uncovers that Singularity's orchestrated partnership in large sums of money with a fake company that was only created for deception purposes. This company is Golden Mainland, was newly registered and had no assets contrary to what singularity claimed. It has no employee and its founder used gmail address on official SEC documents.

I am grateful for companies like Hindenburg Research who conduct all the quality and detailed investigations and while take short positions themselves, also share their research with the public. This reminds us once again the importance of research, be skeptical about publicly traded companies, be aware of deception tactics, and always try to make educated decisions when it comes to investment. I don't know what will happen to this stock $SGLY, but I sure will stay away from it myself.

This shows, once again, that money is made in the markets not only in longing stocks or other financial instruments. There are plays made on short side of the trading as well, everyday. Taking a short position can be risky business. So is taking a long position. For some reason, we the retail traders see more risks in taking short positions rather than long ones. Shorting may even seem counter-intuitive to our human nature. In fact, it is almost same as a long position when it comes to the risks and rewards. However, not all stocks are available to be shorted depending on the brokerage used. Some platform may not have shorting options all-together. Alternative to taking straight short position on a stock is buying put options.

None of this is a financial advice, nor am I suggesting shorting is a better way of trading. Rather I am reminding myself that shorting is also an option when trading, and without the ability to trade both side retail traders might be not fully be prepared or have developed a strategy that can work in markets under any conditions.