Ebang International Issues Open Letter to Shareholders - Seite 2

• Rollout of 6 nm ASIC chips and developing 5 nm ASIC chips;
  
  
• Expanding the global footprint of our cryptocurrency exchange operation;
  
  
• Establishing or acquiring cryptocurrency mining farms used primarily for Bitcoin, Litecoin and Dogecoin mining with our self-developed and proprietary mining machines and ASCI chips; and
  
  
• Forming a more concentrated business strategy with the aim to phase out non-cryptocurrency related business lines and strengthen our market position in the global cryptocurrency mining and exchange businesses.
  

Originally, it was not my intention to respond to the article that appeared on the Hindenburg website on April 6, 2021 (the “Hindenburg Report”). However, I understand the concerns expressed by shareholders eager to get some validation of our business plan and understanding of our position on these matters and thus, to that end, please see the following responses:

1. We did not direct our proceeds from IPO or any other company funds through “a series of opaque deals with insiders and questionable counterparties.”

After we completed our initial public offering in June 2020 (the “IPO”), we purchased redeemable bonds with funds from offering proceeds that were not to be immediately used as part of our treasury management practice designed to invest our cash reserves in order to preserve the principal and earn a return on the principal to preserve the time value of such cash reserves. These bonds were issued in arm’s length transactions facilitated by AMTD, a licensed financial institution in Hong Kong. These bonds can be redeemed by us at any time prior to the maturity. As of the date hereof, we have redeemed all such bonds, and collected the principal and accrued interests in full. We intend to use the redeemed funds to develop our business operations. Our annual report on Form 20-F for the year ended December 31, 2020 will fairly present the transactions undertaken during the course of the 2020 fiscal year.

Prior to our IPO, in order to replenish our working capital, we borrowed from Hong Kong Dewang Limited, a related party controlled by a relative of Mr. Dong Hu, in the aggregated amount of US$24.1 million in principal at an interest rate of 4.75% per annum. Such related party loans were properly disclosed in our IPO prospectus on pages 141, F-126 and F-127. After our IPO, to better manage our balance sheet and save financing costs, the management decided to make early repayments of such loans: (i) from July to October 2020 and prior to the launch of our first secondary offering, we made the repayment using a portion of the IPO proceeds in the amount of US$21 million in principal; and (ii) from November to December 2020, we repaid the balance of such loans in full in the amount of US$3.1 million in principal and US$1.0 million in accrued interests. As of the date hereof, we had cash and cash equivalents of approximately US$274 million on our balance sheet.