Short Seller Accuses TEN Holdings of "Pump and Dump" Scheme, Drawing Regulatory Scrutiny

TEN Holdings Inc's stock was in focus Monday morning following a research report from Fugazi Research. The report claims XHLD exhibits characteristics of a third-party pump-and-dump scheme, driven by aggressive share issuance and a thin public float.

TEN Holdings did not immediately respond to a request for comment.

Here's what investors need to know.

Where does TEN Holdings stock stand amid the pullback? What should traders watch for in XHLD?

Focus on Bancroft Capital's IPO Track Record

At the core of the research report is TEN Holdings' lead underwriter, Bancroft Capital. Fugazi claims Bancroft has a history of bringing small-cap companies to the public market that subsequently became apparent pump-and-dump targets.

The report notes that, as of May 2026, 9 of the last 12 IPOs underwritten by Bancroft were trading 54% to 98% below their offering prices, while two others faced regulatory suspensions or halts following unusual volatility and suspected social media-driven promotion.

The short seller stated: "XHLD exhibits all the telltale signs of a pump-and-dump scheme, operated by unidentified third parties, leveraging a thin float and a low-quality underwriter IPO structure."

Financial Performance and Share Dilution

Fugazi Research highlighted the contraction of TEN Holdings' core business, noting that fiscal 2025 revenue declined 11.4% year-over-year to $3.1 million, while net losses widened to $19.5 million. To maintain compliance with Nasdaq's $2.5 million minimum stockholders' equity requirement, the company has relied heavily on equity financing.

Following a 15-for-1 reverse stock split in December 2025, subsequent share sales increased total share count by approximately 201% within six months.

Regulatory Probes and Capital Allocation

The short seller's report detailed ongoing federal scrutiny, citing grand jury subpoenas and a parallel SEC investigation involving XHLD's IPO and a $5.4 million post-IPO consulting contract.

Fugazi also raised questions about a $500,000 private placement sold to an individual investor whose address corresponds to an agricultural farm in Hainan, China.

Citing the underwriter's track record and extreme price volatility, Fugazi warned retail investors of potential Nasdaq T-12 trading suspension risks.

XHLD Monday Price Action

XHLD price action: TEN Holdings stock was trading flat at $7.66 at the time of Monday's data release. The stock has risen more than 360% over the past month.