Huge loss of 11.5 billion, 18 consecutive limit downs, former executives of "the first blockchain stock" *ST Yijian were investigated by the public security

*ST Yijian (600093.SH) announced on the evening of August 1 that on July 10, the company issued an "Announcement on Reporting to the Public Security Organs". The company reported to the public security organs that some former senior executives were suspected of illegal crimes and received a "Case Acceptance Receipt" from the Kunming Public Security Bureau. On July 30, 2021, the company received a "Notice of Filing a Case" from the Kunming Public Security Bureau and has now filed a case for investigation in accordance with the law.

At present, *ST Yijian is facing many difficulties. The company first had difficulty in publishing its annual report, and then was investigated by the China Securities Regulatory Commission. According to the annual report released late on the evening of July 5, during the reporting period, the company achieved total operating income of 9.717 billion yuan, and net profit attributable to the parent company's owners was -11.524 billion yuan. As of the end of this reporting period, the company's total assets were 9.741 billion yuan, net assets were -3.477 billion yuan, and net assets attributable to the parent company were -3.558 billion yuan.

From the perspective of the reasons for the loss, the main reason for *ST Yijian's loss is asset impairment. According to *ST Yijian's disclosure, after the company and its subsidiaries conducted a comprehensive inventory and asset impairment test on assets that showed signs of impairment at the end of 2020 (including accounts receivable, prepayments, other receivables, factoring receivables, entrusted loans, long-term receivables, long-term equity investments, etc.), based on the principle of prudence, the company set aside various credit impairment provisions totaling 11.626 billion yuan and asset impairment provisions totaling 274 million yuan in 2020, totaling 11.9 billion yuan.

In addition, another point of interest in the annual report is the shareholder's misappropriation of funds. According to the self-examination and confirmation in the letter from the former controlling shareholder, as of June 20, 2021, the former controlling shareholder had misappropriated a total of 4.253 billion yuan of funds from the company and its subsidiaries through the company's four customers.

It is worth noting that while *ST Yijian disclosed that some of its senior executives were under investigation by the public security authorities, the company also disclosed a notice to convene a shareholders' meeting. The company has recently been intensively replacing directors and senior executives. Before and after the annual report was difficult to produce, the company's chief financial officer, secretary, some supervisors, and some directors announced their resignations one after another. Public information shows that since the second half of 2020, the forces of the company's former controlling shareholder Jiutian Holdings have also withdrawn from the company's directors, senior managers, and supervisors.

Throughout the whole process, the former controlling shareholder Jiutian Holdings is undoubtedly the director of *ST Yijian's thunderbolt. During the period when Jiutian Holdings led *ST Yijian, it told the capital story of supply chain management and commercial factoring. *ST Yijian's performance suddenly "changed", and its net profit jumped from 35.4329 million yuan in 2014 to 886 million yuan in 2019, an increase of 2403% in 5 years. Since then, Jiutian Holdings has been looking for a buyer for its chips. After OCT Group refused to take over, Yunnan Industrial Investment Group finally entered the game. Jiutian Holdings also targeted local state-owned enterprises, and successively transferred its shares to Shanghai Gangtong and Yunnan Industrial Investment Group's Gongtou Junyang, cashing out a total of 3.249 billion yuan, and reduced its holdings by 24.5308 million shares through the secondary market. It currently holds 119.5 million shares, accounting for 10.65% of Yijian shares.

It should be pointed out that although the former controlling shareholder Jiutian Holdings has long given up control, as mentioned above, the directors or senior executives nominated by Jiutian Holdings still have a certain say in *ST Yijian, that is, on the eve of *ST Yijian's official bankruptcy, they can still influence *ST Yijian's operations through some arrangement and seize huge funds from it, of which 97 million yuan was newly occupied from January 1, 2021 to June 30, 2021.

Judging from various signs, some of the former executives mentioned in the *ST Yijian announcement have been investigated by public security organs, which may be former executives representing Jiutian Holdings.

Jiemian News reporters noted that *ST Yijian not only faced criminal investigations by its former senior executives, but the company also faced investigations by the China Securities Regulatory Commission for suspected information disclosure violations. Before and after the entire crash, the company's stock price even fell by 18 consecutive limits, and many investors suffered heavy losses. According to the Securities Law and the judicial interpretation of the Supreme People's Court, once the regulatory authorities issue administrative penalty documents or the court makes an effective criminal judgment, determining that *ST Yijian has violated information disclosure laws and regulations, this company, once the first blockchain supply chain finance stock, will face huge claims.