Former TuSimple co-founder calls on courts to block asset transfers to China

Xiaodi Hou, co-founder and former CEO of autonomous trucking startup TuSimple, urged a California district court to issue a short lived restraining order to prevent the corporate from moving its remaining U.S. assets to China, according to a recent court filing.

Hou, who plans to file for a short lived restraining order in December at his next scheduled court hearing, hopes to stop TuSimple from moving tens of tens of millions of dollars in money to China. As of September, TuSimple had capital of about $450 million. Hou can be asking for expedited discovery of evidence to support his conclusions.

Hou’s statement to the court is the newest escalation in a dispute between TuSimple and a few shareholders over attempts to use investor capital to finance a brand new business in China related to AI-generated animations and video games.

This is the primary time Hou – who was ousted as CEO in 2022 – has publicly accused TuSimple and its leaders of funneling assets to animation and gaming corporations owned by or with Mo Chen, TuSimple’s co-founder and CEO related. management board under the guise of a business axis. Hou also argued that the corporate violated SEC rules by failing to inform shareholders or obtain shareholder consent before changing its business direction or transferring funds to China.

Hou now heads a brand new autonomous trucking startup in Texas

TuSimple, once valued at $8.5 billion after its 2021 IPO, faced setbacks that led to its U.S. company shutting down and delisting from the stock exchange in January 2024. The company’s stated goal was to commercialize its AV technology in China. However, because the yr progressed, TuSimple reduced its workforce, stopped operating autonomous vehicles, and commenced hiring staff to perform AI-based gaming and animation tasks.

In August, shareholders sent a letter to the board after learning that TuSimple was devoting resources to AI-based games and animations. Management responded a couple of weeks later by publicly announcing the creation of a brand new business unit.

This week, Hou urged the court to issue a short lived restraining order after noting a request filed by TuSimple China that signaled the corporate intended to transfer money (or had already done so) from the United States. TuSimple China’s two subsidiaries saw their assets grow to a complete of $150 million last week, according to Hou’s declaration and data in public documents.

“These statements indicate a suspicious increase in the value of assets registered between these two subsidiaries in a single day, which is a precursor to the transfer of a large amount of cash from the US to China,” the statement said. “The most likely scenario is that the filings in China were a preparatory step before TuSimple US transferred the money to its subsidiaries in China.”

Hou added that such large money transfers “are outside the normal course of business” and are comparable to TuSimple China’s “heyday when the company had a large fleet of autonomous trucks in Shanghai” and employed about 700 employees. In September, TuSimple China had roughly 200 employees.

The opportunity for shareholders like Hou to get what they need – which is to liquidate TuSimple in order that they can recoup a few of their losses – is shrinking.

TuSimple is in a gray area when it comes to Securities and Exchange Commission enforcement. Although TuSimple was delisted earlier this yr, the corporate continues to be registered with the SEC and subsequently subject to U.S. scrutiny. Once the cash goes to China, U.S. shareholders may have no way to get well their original investment.

TechCrunch reached out to the SEC to discover whether the agency is investigating TuSimple over shareholder complaints.

TuSimple didn’t immediately respond to TechCrunch’s request for comment.