China’s mainland artificial intelligence (AI) company “Moonshot” has been facing multiple setbacks in its listing process recently. Reports emerged accusing the company of misconduct and facing lawsuits from another AI company’s shareholders. It is now rumored that the American bank may withdraw from the “Moonshot” IPO preparations.
According to a report by Bloomberg on October 14th, insiders revealed that the American bank is no longer one of the potential banks participating in the initial public offering (IPO) of “Moonshot” as the company is facing scrutiny from the U.S. side.
The U.S. allegations include seven Chinese AI companies, including “Moonshot,” extracting a large amount of information from U.S. AI models to accelerate training their own products. This decision by the American bank highlights the cautious considerations of banks when competing for sensitive and highly competitive AI financing business. Currently, the only American bank appointed to participate in this IPO is Goldman Sachs which will serve as a joint sponsor alongside China International Capital Corporation and Deutsche Bank.
Last month, the American AI company Anthropic released a 154-page report accusing “Moonshot” of misleading users by redirecting customer requests to Anthropic’s Claude system, presenting answers generated by Claude to users, while making them believe they were using the company’s Kimi model.
The report disclosed that seven Chinese companies violated regulations by using Anthropic’s Claude extensively, including “Moonshot,” DeepSeek, Alibaba, Zhifu, Shang Tang, Xiyu Technology (MiniMax), and Xiaomi Group.
In another report by Reuters on October 12th, it was stated that before the listing in Hong Kong, “Moonshot” was embroiled in a legal dispute with shareholders of the AI software developer Beijing Recurrent AI Technology Co., Ltd. (Recurrent AI) who demanded compensation for alleged improper behavior by the company. Records show that the CEO Yang Zhilin and CTO Zhang Yutao of “Moonshot” co-founded Recurrent AI in 2016. Later in 2023, they established “Moonshot” and continued to serve as directors of Recurrent AI’s holding company.
Recurrent AI and “Moonshot” previously arbitrated in Hong Kong. According to a letter from Recurrent AI’s representative lawyers to “Moonshot” investors obtained by Reuters, Recurrent AI and some investors accused Yang Zhilin and Zhang Yutao of making false statements to Recurrent AI investors, harming Recurrent AI’s interests for personal gain.
The allegations also include the unauthorized transfer of key large-scale language model data servers from Recurrent AI to a subsidiary of “Moonshot” in April 2023, and the deletion of other key data in September 2024 on Zhang Yutao’s instructions. Recurrent AI and its investors are also considering taking independent legal action against Zhang Yutong, CEO of “Moonshot.” After resigning from the board of Recurrent AI in 2022, Zhang Yutong obtained a large amount of shares in “Moonshot,” a significant interest arrangement deliberately concealed from other shareholders of Recurrent AI.
Insiders suggest that the unresolved disputes between “Moonshot” and Recurrent AI could bring governance, equity, and disclosure issues to potential investors, complicating the listing process.
It is reported that “Moonshot” has completed its final round of financing with a valuation of approximately $50 billion and plans to IPO in Hong Kong in the first quarter of 2027. This comes just a month after the company reportedly submitted its listing application to the Hong Kong Stock Exchange in confidence. However, signs of struggling to support the listing valuation for mainland AI companies have emerged.
Public information shows that in January of this year, the companies Zhifu and Xiyu Technology landed on the Hong Kong Stock Exchange, with their highest market values exceeding HK$1 trillion and nearly HK$400 billion, respectively. As of October 15, the market values of both companies have fallen to HK$248.1 billion and around HK$63.1 billion, respectively. After adjusting net losses for factors such as fair value reassessment of preferred shares brought by listing, the adjusted net losses of both companies have been expanding.