Xiaodi Hou, co-founder and former CEO of TuSimple, petitioned a California district court to vacate a temporary restraining order that prohibits the self-driving trucking startup from relocating its remaining US assets, citing irreparable harm if enforcement persists. Property transfer to China amid ongoing court proceedings.
A shareholder who plans to use for a temporary restraining order in December, pending a scheduled court hearing, aims to prevent TuSimple from transferring tens of millions of dollars in cash to China. As of September, TuSimple held approximately $450 million in capital. How can a party requesting expedited discovery of evidence request such a move?
Hou’s latest court filing, submitted on Monday, marks a significant escalation in the ongoing dispute over the company’s efforts to utilize investor capital to fund a new AI-generated animation and gaming venture in China.
For the first time since stepping down as CEO in 2022, Hou has publicly accused TuSimple and its leaders of diverting funds towards animation and gaming companies owned by or affiliated with Mo Chen, TuSimple’s co-founder and chairman of the board, under the pretext of a business pivot. Additionally, Hou contended that the corporation had breached SEC regulations by failing to disclose and obtain shareholder approval prior to modifying its business strategy or diverting funds to China.
How now heads a company in Texas.
TuSimple, once valued at $8.5 billion after its series B funding round, faced significant setbacks that ultimately led to the company’s departure from the United States. and delisting in January 2024. The corporation’s primary objective was to capitalize on its audiovisual expertise by bringing innovative solutions to the Chinese market. As the year went on, TuSimple drastically reduced its staff, halted autonomous driving operations, and began recruiting employees to focus on roles tied to AI-powered gaming and animation development.
In August, shareholders sent a letter to the board expressing concerns after discovering that TuSimple was diverting resources away from its core focus on autonomous driving technology towards developing AI-powered gaming and animation capabilities. The board subsequently responded two weeks later with a public announcement, formally introducing its newly established enterprise unit.
This week, Hou called on the court to contest a brief restraining order after discovering a filing by TuSimple China indicating it was preparing to transfer funds – or had already done so – out of the US. TuSimple’s two Chinese subsidiaries recently saw a surge in combined value, with the figure standing at approximately $150 million, according to statements made by Hou and publicly available financial reports.
Here are the improvements:
Subsidiaries’ filings reveal an anomalous surge in registered properties, potentially foreshadowing a significant financial shift from U.S. soil? to China,” reads the declaration. The definitive state of affairs is that preceding TuSimple’s US filings were the Chinese preparations. transfers cash to its Chinese subsidiaries.
The CEO clarified that this unprecedented transaction is akin to the peak of TuSimple China’s operations, where it maintained a substantial autonomous truck fleet in Shanghai, employing approximately 700 personnel during that time. As of September, TuSimple China employed around 200 personnel.
As the alternatives for Hou to recoup some of his losses as a shareholder in TuSimple continue to dwindle, the window for such an opportunity is rapidly closing.
TuSimple is navigating uncertain regulatory terrain amid inquiries from the Securities and Exchange Commission (SEC). While TuSimple’s stock has been delisted from trading earlier this year, the company remains a registrant with the Securities and Exchange Commission (SEC), thereby remaining subject to U.S. regulatory oversight? scrutiny. When US-listed companies repatriate funds to China, American shareholders experience a decline in their investment value? may lack any viable means to recoup funds from their original financing source.
TechCrunch has contacted the Securities and Exchange Commission (SEC) to determine whether the agency is examining TuSimple in response to investor concerns.
TuSimple did not immediately respond to TechCrunch’s request for comment.
