Webull, the cryptocurrency trading platform under scrutiny for its potential connections to China, has seen its shares plummet nearly 76% since it went public via a special acquisition company early last year. This steep decline isn’t particularly shocking when considering the ongoing concerns discussed in On The Money.
Since at least 2023, this column has highlighted increasing worries in Congress regarding whether the management of the discount brokerage, which boasts 28 million users globally, is too closely aligned with the Chinese surveillance apparatus. Critics fear that this firm might collect sensitive data on American customers, which could be shared with Chinese intelligence—though Webull has consistently denied these claims.
On Wednesday, the bipartisan House Select Committee on China elaborated on these concerns in a report titled “Free Trades, Hidden Ties Exposing Webull’s China Links.”
The report asserts that “Webull’s ownership structure, technical workforce, technology infrastructure, cross-border data handling, corporate financing, and compliance frameworks are structurally linked to the People’s Republic of China,” often abbreviated as the PRC.
Webull has previously characterized itself as a “both a US and Chinese company,” maintaining that American customer data is securely stored within the United States. However, the report points out that its founder, Anquan Wang, is a Chinese national who serves as the chairman and CEO.
Additionally, the report highlights that Wang holds 79.2% of the company’s voting power through a dual-class share structure, which allows him to control significant decisions such as director elections.
The Committee’s findings raise “national security concerns,” particularly as they relate to Webull’s data practices, which could expose American investors to risks from PRC laws and surveillance.
As I mentioned, Webull has denied allegations that it serves as a tool for espionage. After the report’s release, shares dropped about 20%. By the end of the day, Webull’s stock had fallen 19%, closing at $5.89.
A Webull representative expressed disappointment over the Select Committee’s report, citing “significant inaccuracies and unsupported conclusions” and noted that they weren’t approached for clarification before its publication.
However, the press representative did not specify what those inaccuracies were. The statement emphasized that Webull has cooperated with the Committee, but had not received any communication from them for over 20 months leading up to the report. According to the company, its US operations are based in St. Petersburg, Florida, and New York City, with American customer data stored securely in the US, where access to it is tightly controlled.
A spokesperson for the Committee clarified that the report does not dispute where the data is stored, but rather focuses on who has access to it and the systems managing it.
This report mirrors concerns that US regulators have faced regarding the future of TikTok, a platform with previous China ties, particularly fears that the PRC might exploit user data for espionage as the Chinese Communist Party essentially governs all companies operating in China.
For years, both sides of the political aisle have debated the possibility of banning TikTok because of fears related to identity theft and the CCP’s access to user data.
Former President Trump attempted to ban TikTok but ultimately reached an agreement in which the app’s US branch became majority-owned by American investors, with data managed by the US-based Oracle.
