Short sellers took aim at two vastly different targets this week, but both stories share a common thread: companies living on borrowed time.

Wolfpack Research delivered a bombshell report on Japanese GPU data center company Datasection ($3905.TYO). The firm alleges Datasection is illegally funneling restricted NVIDIA B200 chips to Tencent. Tencent is a Chinese military-linked entity blacklisted by the U.S. Department of Defense. This represents a flagrant violation of export controls. The stock cratered 23.9% through week's end as institutional investors fled and regulatory scrutiny intensified.

Meanwhile, Kerrisdale Capital piled onto BitMine Immersion Technologies ($BMNR). This follows Fugazi's July critique with a scathing analysis of the Ethereum treasury's collapsing economics. After flooding the market with $10 billion of new stock in three months, BMNR's NAV premium has compressed from 2.0x to 1.2x. The "digital asset treasury" playbook faces extinction amid vanished scarcity and a tidal wave of cheaper ETF alternatives. The stock finished the week down 11.1%, with Kerrisdale arguing the premium is destined to sink toward parity.

Wolfpack Research Short Report on Datasection, Inc. (TSE: 3905.T)

Report Impact on Stock Price

Wolfpack Research's report alleging illegal GPU exports to Chinese military-linked company Tencent triggered an immediate and brutal market reaction, with Datasection plunging 18.7% intraday to ¥1,543—its lowest point on the day of publication. The stock closed the report day down 13.6% at ¥1,640 and continued its decline through week's end, finishing at ¥1,446 for a total drawdown of 23.9% from the pre-report close of ¥1,899.

Who is Datasection, Inc.?

Datasection is a Japanese GPU data center company listed on the Tokyo Stock Exchange with a market cap of ¥42 billion. The company recently announced plans to build an NVIDIA B200 supercluster for a mystery "large cloud service provider," securing orders for 15,000 restricted B200 GPUs worth $272 million. According to Wolfpack Research, this mystery customer is Tencent—a Chinese company blacklisted by the U.S. Department of Defense for ties to the Chinese military.

Key Points from the Report

• Illegal Export Control Violations: Wolfpack alleges Datasection is illegally channeling restricted NVIDIA B200 GPUs to Tencent, a Chinese military-linked company blacklisted by the United States, in flagrant violation of U.S. Bureau of Industry and Security export controls and Japanese national security interests

• CEO Concealing Chinese Military Backing: CEO Norihiko Ishihara allegedly hid Tencent's identity from his own staff and is using NowNaw Japan (with offices located in Tencent's Dalian building) to mask Chinese funding after Japanese banks refused financing upon learning of Tencent's involvement

• Mass Institutional Exodus: Major shareholders are fleeing—KDDI slashed its stake from 9.5% to 3.7%, while Nippon Life dumped its entire 6.69% position to zero, signaling a clear vote of no confidence in the company's business model

• Red Flag Corporate Actions: The company switched auditors from PwC Japan to an unknown firm (Amaterasu Limited Audit Company) not registered with PCAOB, then accepted massively dilutive financing (44 million warrants at 44% discount, representing 64% dilution) from a Singapore financier with China ties after traditional lenders refused

• Regulatory Crosshairs: Wolfpack has notified U.S. Bureau of Industry and Security, Homeland Security, and Japanese authorities about the alleged violations, expecting forced decoupling from Tencent and near-total destruction of shareholder value with potential criminal liability

  Read our full summary here

Kerrisdale Capital On BitMine Immersion Technologies, Inc. (NYSE: BMNR)

Report Impact on Stock Price

Kerrisdale Capital's report exposing BMNR's disguised dilution and collapsing NAV premium initially sparked a brief selloff, with shares dipping 3.5% intraday to $57.12 before recovering to close up 1.4% at $60.00 from the pre-report close of $59.20. However, as the market digested the full implications of the massive share issuance and stalling ETH-per-share growth, the stock collapsed through week's end, finishing at $52.60 for a total decline of 11.1%.

Who is Slide Insurance?

BitMine Immersion Technologies is an $18 billion NYSE-listed company that transformed from a Bitcoin mining operation into an Ethereum-focused digital asset treasury (DAT) holding 2.8 million ETH. Led by Executive Chairman Tom Lee (co-founder of Fundstrat Global Advisors), the company raised over $10 billion in just three months through aggressive at-the-market offerings, attempting to replicate MicroStrategy's Bitcoin treasury playbook but focused on Ethereum instead.

Key Points from the Report

• Premium Collapse from Relentless Dilution: BMNR raised over $10 billion in just three months—approximately $170 million per trading day—flooding the market with new shares and causing the NAV premium to collapse from 2.0x to 1.2x in six weeks, with ETH-per-share growth grinding to a halt despite massive capital raises

• Disguised Dilutive Financing: The September 19th offering marketed as "materially accretive" at $70 per share (a 14% premium) was actually issued at an effective price of $42 per share, a 31% discount—when accounting for the two attached warrants valued at $14 each, representing financial engineering designed to obscure true dilution from shareholders

• Failed Flywheel Mechanics: Despite accumulating 65% more total ETH holdings, per-share growth was only 17% due to overwhelming dilution, breaking the reflexive "flywheel" that was supposed to power the DAT model where premium enables accretive raises that boost per-share metrics and justify higher premiums

• Vanished Competitive Moat: The scarcity that once justified DAT premiums has evaporated, with 154 US-listed firms announcing $98 billion in crypto treasury raises this year alone, plus a "tidal wave" of low-cost Ethereum ETFs launching after SEC streamlined approvals from 240 days to 75 days

• Opacity and Deteriorating Disclosures: BMNR stopped disclosing share counts in weekly updates, making it difficult for investors to track dilution in real-time, while comparable DAT vehicles like EthZilla and SharpLink already trade at or below 1.0x NAV, signaling the entire sector's premium compression toward parity

  Read our full summary here

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