Tuya, Inc. Fraud Class Action Lawsuit
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Tuya, Inc.

The law firm of Kirby McInerney LLP announces that a class action lawsuit has been filed in the U.S. District Court for the Southern District of New York on behalf of those who acquired Tuya Inc. (“Tuya”) (NYSE: TUYA) American Depositary Shares (“ADSs”) in or traceable to the Company’s March 2021 initial public offering (the “IPO”). Investors have until October 11, 2022 to apply to the Court to be appointed as lead plaintiff in the lawsuit.
Tuya developed and offers a purpose-built “Internet of Things” (“IoTs”) cloud platform that delivers a suite of offerings, including Platform-as-a-Service, or PaaS, and Software-as-a- Service, or SaaS, to businesses and developers.
On February 26, 2021, Tuya filed with the SEC a registration statement on Form F-1 for the IPO, which, after amendments on March 12, 2021 and March 16, 2021, was declared effective on March 17, 2021 (the “Registration Statement”). On March 19, 2021, the Company filed with the SEC a prospectus for the IPO on Form 424B4, which incorporated and formed part of the Registration Statement. The Registration Statement was used to sell to the investing public over 45 million Tuya ADSs at $21 per ADS (which included a partial exercise of the Underwriter Defendants’ over-allotment option), generating over $946 million in gross offering proceeds.
On May 11, 2021, an article on techcrunch.com revealed that over the past few days, “several top Chinese sellers disappeared from Amazon.” The report stated that over 13.1 million records documenting a massive fake review scam had been uncovered, with more than 200,000 Amazon accounts. The article added that “[i]n total, the suspended accounts contribute over a billion dollars in gross merchandise value (GMV) to Amazon.” The article quoted Amazon as stating: “‘We take swift action against those that violate [our policies], including suspending or removing selling privileges.’”
On July 9, 2021, verdict.co.uk reported that Amazon had “closed 340 online stores of one of its largest Chinese retailers in the first half of this year” as it cracked down against paid reviews and other violations of Amazon’s terms of use. In subsequent weeks, Amazon banned hundreds of Chinese brands across thousands of sellers’ accounts, many of which were clients of Tuya. Amazon stated that these sellers knowingly, repeatedly, and significantly violated Amazon’s seller policies, especially the ones around review abuse.
On August 18, 2021, Tuya issued a press release announcing the Company’s financial results for the second quarter of 2021. The release also provided the outlook for the third quarter of 2021, stating that the Company expects revenue to be in a range of just $83 million to $86 million, which surprised and disappointed analysts and investors. On this news, Tuya ADS price declined by $2.85 per ADS, or approximately 19.00%, from $15.00 per ADS to close at $12.15 per ADS on August 18, 2021.
On August 9, 2022, the day the suit was filed, Tuya shares closed at $1.75 per ADS.
The lawsuit alleges that, throughout the Class Period, the IPO’s registration statement documents were materially false and misleading because they failed to disclose that: (i) a material portion of Tuya’s China-based customers were engaged in the widespread and systematic manipulation of reviews and product offerings in violation of Amazon.com’s terms of use; (ii) prior to the IPO, a consumer investigation and data breach had exposed an illicit fake review scheme being perpetrated by many of Tuya’s clients, among others, which included, among other things, the exposure of 13 million records of organized fake review scams linked to over 200,000 Amazon account profiles; (iii) as a result, there was a substantial risk that a material portion of Tuya’s significant customers would be barred from using Amazon.com’s platform, negatively impacting Tuya’s business, revenue, earnings, and prospects; and (iv) as such, the IPO’s registration statement’s representations regarding Tuya’s historical financial and operational metrics and purported market opportunities and expected growth did not accurately reflect the actual business, operations, financial results, and trajectory of Tuya at the time of the IPO.

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