July 8, 2020
GSX Technology - a Chinese listed ADR (symbol: GSX) is an absolute fraud and the company needs to be investigated immediately. They are faking their user numbers and revenue by using 'brusher' companies in China to inflate user numbers through bot farms. Numerous fraud reports have come out outlining the details of the operation from reputable sources and past employees of the company. The CEO, Larry Chen, privately owns two civilian bridge loan companies (its actually illegal as both of these have no legal licenses) and I assume that he's using these companies to funnel money into the company. GSX has evaded taxation in China, and fabricated 166 million VAT abroad to cover up the fact that the huge amount of income has been artificially increased. GSX belongs to Beijing Baijiahulian Technology Ltd. according to their corporate structure and the Chinese tax authority explained that 166 million yuan is the total Tax payment for all companies associated which is very low in relation to their revenue proving that the revenue is fake. Their auditor, Deloitte Touche Tohmatsu, was the same auditor that was used in Chinese frauds Longtop and China Media Express. The Deloitte partner that has been in charge of GSXs audit is Li Li Shan who has a questionable track record and involved in other frauds in China.
There is no possible way these financials make any sense. They are showing growth, margins and operating income that are so far elevated above competitors without any substance. All the app data collectors prove that GSX is an industry lagger, not leader as the company claims.