(Nov 28): SenseTime Group Inc shares plummeted their most since April after short-seller Grizzly Research released a report accusing the Chinese artificial intelligence (AI) company of inflating its revenues.

Grizzly cited documents and insiders describing how SenseTime engaged in what it called round-tripping, where it allegedly financed companies that in turn fed business to SenseTime. Its stock tumbled as much as 9.7% before closing about 5% lower in Hong Kong. SenseTime said the report “is without merit and contains unfounded allegations” in a filing to the exchange.

SenseTime, best known as a leader in computer vision, was among the first Chinese tech firms to receive government approval to publicly roll out its own ChatGPT-like services. The company, earlier backed by Alibaba Group Holding Ltd, listed publicly in Hong Kong in one of the most highly anticipated debuts of 2021.

The company’s growth, however, has slowed dramatically. Co-founded by Massachusetts Institute of Technology alum Tang Xiao’ou, SenseTime was blacklisted by the US government in 2019 on accusations related to human rights violations in China’s far-western region of Xinjiang. That has restricted its access to capital and crucial US tech components, which has been compounded in recent months by new curbs on the sale of advanced AI chips and chipmaking equipment to Chinese firms.

Alibaba and Japanese investor SoftBank Group Corp have been whittling down their stakes in SenseTime over the past few months. China’s AI arena has seen frenzied movement of capital and talent since the launch of ChatGPT a year ago, but the sluggish domestic economy and US chips restrictions have posed high hurdles for the industry.

SenseTime is the latest in a line of high-profile Chinese companies Grizzly Research has targeted. It said in September it was shorting PDD Holdings Inc. And in 2022, it issued a report critical of electric vehicle maker Nio Inc.