[source image]
Dow Jones NewsMay 21, 2:00 PM UTC
DJ Chinese Firms' Plan to Avoid Stock Delisting: Buy Trump's Memecoin -- WSJ
By Vicky Ge Huang
Some small Chinese companies are betting President Trump's memecoin will help them save their shares from losing a place on U.S. exchanges.
A technology company called GD Culture Group said on May 12 that it had struck a $300 million funding deal to help it amass a stockpile of cryptocurrencies, including bitcoin and the president's memecoin, $TRUMP. The announcement sent shares of GD Culture, which is based in New York but operates in China, up by 14%.
Three days later, Chinese garment maker Addentax Group said it was in discussions with unnamed crypto holders to buy up to $800 million of $TRUMP tokens and bitcoin. Addentax's stock didn't quite get the same boost, falling about 7% that Thursday after an intraday surge of more than 150%.
GD Culture and Addentax share more than just ties to China and a mutual affinity for the president's memecoin: They are both in danger of being delisted from Nasdaq, a major U.S. exchange. And by promoting investments in crypto (and Trump), these companies might simply be grasping for ways to raise their stock prices and hold on to their U.S. listings, securities-industry executives said.
"They want to invoke the T word so they get a lift and a bump," said Daniel McClory, head of China at Boustead Securities, an investment bank. "I bet we're going to see a lot more transactions like this certainly because crypto is hot."
The moves demonstrate how Trump's embrace of crypto has unlocked new avenues for companies and investors to profit from his brand. GD Culture and Addentax announced their plans to buy $TRUMP just days before many of the memecoin's biggest holders were rewarded for their investments with an invite to a gala dinner with the president. The event, which will be held Thursday, has been described as an ethics nightmare by government watchdog groups.
In March, Nasdaq informed GD Culture that it violated a rule requiring listed companies to maintain a minimum of $2.5 million in shareholders' equity, or its value as determined by the difference between its assets and liabilities. GD Culture didn't respond to a request for comment on whether the company has regained compliance with the exchange.
Last year, Addentax's stock dropped below the $1 minimum price required by Nasdaq to maintain a listing on the venue for more than 30 business days. On March 3, the company said it was back in compliance with this Nasdaq rule. But on Monday, Addentax's shares slipped below $1 again. The Shenzhen, China-based company had a market cap of $4 million.
At least one Chinese company has accidentally benefited from its unexpected association with the Trump brand. Wisesoft, a Chinese software company that has no connection to the president, surged as Trump inched closer to presidential victory last year for no apparent reason other than that the stock's name sounds like "Trump Big Wisdom Win" in Mandarin.
Bankers say the big purchases of $TRUMP by Chinese firms are the latest example in a long list of similar transactions where small-cap companies try to attach themselves to the latest hot trend to reanimate their moribund stock prices.
Such examples are rife in previous crypto bull runs. Companies switched from whatever they were doing toward cryptocurrencies, with the most notorious instance being Long Island Iced Tea changing its name to Long Blockchain.
The Chinese companies are by no means the only businesses to latch on to Trump's crypto venture to boost their own fortune. Freight Technologies, a Houston-based logistics company, said it has purchased $2 million of the $TRUMP memecoin to expand and diversify its crypto treasury. Freight said last month that it had entered into an agreement with an unnamed institutional investor to issue up to $20 million in convertible bonds to fund its acquisition of $TRUMP tokens.
Some crypto executives were skeptical of such moves.
"A corporate treasury's job is to preserve and build value for shareholders over time, not to speculate on the latest memecoins," said Cory Klippsten, chief executive of bitcoin financial services firm Swan Bitcoin. "However, if a loophole exists for purchasing influence, expect it to be exploited."
Write to Vicky Ge Huang at vicky.huang@wsj.com
(END) Dow Jones Newswires
May 21, 2025 10:00 ET (14:00 GMT)
Copyright © 2025 Dow Jones & Company, Inc.
