Datasection v. Wolfpack Research Alleges Short-and-Distort Scheme Over GPU Export Claims
Defendants' Report Falsely Claimed Tencent Was Blacklisted, Plaintiff Says
Datasection Inc. alleges that Wolfpack Research LLC, its affiliated entities Wolfpack Capital Partners GP, LLC (the general partner of Wolfpack Capital Partners, LP), Wolfpack Capital Partners Manager, LLC, and Wolfpack Capital Partners, LP, along with principal Dan David, orchestrated a short-and-distort scheme by publishing a 15-page report falsely accusing the Japanese technology company of illegally providing restricted NVIDIA GPUs to Tencent, a Chinese-owned entity the defendants claimed was "blacklisted" by the U.S. government. The complaint also names Bob Xia, owner of Livemood Inc., and Zhi Bo Li, CEO of First Plus Financial, as key figures in the alleged scheme, though they are not defendants in the case. Wolfpack Research was founded in 2019, and the affiliated entities—Wolfpack Capital Partners GP, LLC, Wolfpack Capital Partners, LP, and Wolfpack Capital Partners Manager, LLC—were formed in March 2025, with Wolfpack Capital Partners GP, LLC established on March 17, 2025, Wolfpack Capital Partners, LP on March 18, 2025, and Wolfpack Capital Partners Manager, LLC on March 24, 2025. The manager entity registered to do business in Pennsylvania on June 10, 2025 (Compl. ¶9, ¶20).
Datasection seeks compensatory, consequential, and punitive damages, as well as restitution of the defendants' profits and a permanent injunction to retract the report. The complaint alleges that the defendants' actions caused immediate and severe harm to Datasection's reputation, share price, and business relationships, including the disruption of financing and lost opportunities (Compl. ¶46). The defendants' report falsely claimed that Datasection's collaboration with Tencent, including a $272 million investment in a supercluster of NVIDIA B200 GPUs, violated U.S. and Japanese export policies due to Tencent's alleged ties to the Chinese military (Compl. ¶7, ¶21). The report also falsely asserted that "Datasection’s work with Tencent is a flagrant violation and could result in a blacklisting" (Compl. ¶27).
"Defendants took a short position in Datasection's stock, falsely accused the company of serious export-control violations and made other false assertions, and then profited as the stock price collapsed — just as Defendants planned," the complaint alleges (Compl. ¶1). The report, published on October 8, 2025, triggered a 14% decline in Datasection's stock price on the day of publication, closing at ¥1,899, and a 23.9% decline by the end of the week, reducing Datasection's market capitalization by billions of yen from its prior valuation of ¥42 billion (Compl. ¶8, ¶32). The defendants' private investment fund, Wolfpack Capital Partners, LP, held approximately $30 million in gross assets as of early 2025 and had raised $35,750,000 from eight investors by May 2025, underscoring their financial capacity to execute the alleged scheme (Compl. ¶11).
Report Falsely Claimed Tencent Was Blacklisted, Plaintiff Says
The report, titled "Our INVESTIGATION Indicates Japanese Firm Datasection (TYO: 3905) Is Illegally Providing NIVIDA [sic] GPUs to BLACKLISTED Chinese Firm Tencent," alleged that Datasection violated U.S. export controls by supplying NVIDIA GPUs to Tencent, which the defendants falsely claimed was blacklisted by the U.S. Bureau of Industry and Security (BIS). The complaint asserts that Tencent is not blacklisted and that no licensing requirement exists under U.S. export control laws for providing GPU computing power to Chinese-owned companies absent knowledge of specific end uses. The complaint further alleges that the defendants fabricated or recklessly disregarded the falsity of their claims regarding Tencent's alleged blacklisting and the purported BIS licensing requirements (Compl. ¶42, ¶43, ¶63). Datasection denies all allegations, asserting that the defendants' claims are baseless and that the company has complied with all applicable laws and regulations.
The complaint states, "Tencent is not 'blacklisted' under U.S. export controls or sanctions," and notes that Barron’s later reported that export rules do not bar Chinese companies from accessing GPU computing power remotely (Compl. ¶42, ¶45). The defendants' report falsely claimed that "Tencent’s blacklisting by the United States" made the matter a "potentially . . . explosive international scandal" (Compl. ¶26). The report also falsely asserted that "providing cutting-edge GPUs to China-owned firms is severely restricted and violates US export controls" (Compl. ¶26). The complaint highlights that the defendants' central thesis was based on industry rumor and unnamed sources, rather than verified documentation, and that the report was designed to create the appearance of institutional rigor by using plural pronouns such as "we" (Compl. ¶44, ¶53).
The complaint alleges that the defendants' report falsely conveyed that Datasection was engaged in criminal conduct, stating, "what Datasection is doing here is illegal" (Compl. ¶25, ¶65). The report further claimed that Datasection and Tencent would be "forcibly decoupled," resulting in "near total annihilation" for Datasection, a statement the complaint characterizes as sensationalized and false (Compl. ¶28). The report also falsely asserted that Japanese banks had "proverbially slammed the door in CEO, Norihiko Ishihara’s face, apparently recognizing the scheme’s blatant illegality" (Report excerpt).
Defendants' Financial Motive and Short Position
The complaint alleges that the defendants had a direct financial motive to publish the report, as their private investment fund, Wolfpack Capital Partners, LP, held approximately $30 million in gross assets and raised $35,750,000 from eight investors as of May 2025 (Compl. ¶11). Dan David, the owner and principal of the Wolfpack entities, owns 99% of Wolfpack Research and 75% of Wolfpack Capital Partners Manager, LLC, the investment adviser and manager of the fund (Compl. ¶13). The complaint further alleges that the defendants' prior short reports underperformed, motivating them to fabricate or sensationalize the Datasection report to achieve their financial goals (Compl. ¶24). The defendants' disclaimer explicitly states, "Obviously, we will make money if the price of the covered issuer stock declines," and David previously stated, "I’ll bet against them, and I’ll write a report and I’ll publish it... I’ll say they’re a fraud, and I’ll short" (Compl. ¶22).
The defendants' financial structure and ownership stakes underscore their alleged motive. Wolfpack Research is owned by Dan David and Paillard & David Consulting Inc., while Wolfpack Capital Partners Manager, LLC is described as an alter ego of David and the fund entities, registered as an exempt reporting adviser with CRD No. 335980 (Compl. ¶9, ¶10). The complaint alleges that the defendants paid sources, such as former employees, through expert networks, who may hold grudges or financial interests in providing damaging information. The report's disclaimer notes, "We sometimes pay former employees indirectly through an expert network to speak with us" (Compl. ¶23, Page 38).
The complaint also details the defendants' alleged scheme to profit from Datasection's stock decline. On September 10, 2025, First Plus Financial Holdings, a Singaporean financier for Datasection, received warrants for 44 million Datasection shares, representing a 64% dilution of existing shares. The warrants were issued at a 44% discount to the prior closing day's stock value, with an exercise price of ¥1,250 per share (Compl. ¶21, ¶53). The complaint alleges that Zhi Bo Li, the CEO of First Plus Financial, played a key role in this transaction, which the defendants later cited as evidence of Datasection's financial instability. The 23rd series stock acquisition rights issuance included 44 million potential shares, compared to 22.1 million shares outstanding plus 3.1 million potential shares, further diluting existing shareholders (Compl. ¶21). The defendants' report falsely claimed that this transaction was indicative of Datasection's financial distress, despite the company's public statements to the contrary.
Key Parties and Related-Party Transactions
The complaint identifies several key parties involved in Datasection's operations and the alleged scheme. Norihiko Ishihara, Datasection's CEO, is accused of founding NowNaw Japan (NNJ) as a related-party entity and misrepresenting it as unrelated to Datasection (Compl. ¶15-16). NNJ, which announced a joint AI cloud service with Datasection in August 2024, is 90% owned by Omi Reika and operates through its subsidiary, Dalian Shouying Technology Co., Ltd, located in the Dalian Tencent Building (Compl. ¶13, ¶19). The complaint alleges that NNJ has 30 employees, though only four were insured, raising questions about its operational scale (Compl. ¶18). The report falsely claimed that Japanese banks had "proverbially slammed the door in CEO, Norihiko Ishihara’s face, apparently recognizing the scheme’s blatant illegality" (Report excerpt).
John Ellis Bush Jr., a Datasection director and grandson of former U.S. President George H.W. Bush, is also named in the complaint as a key figure in the company's leadership (Compl. ¶1). The complaint further details Datasection's relationships with major investors, including KDDI and Nippon Life. KDDI, a Japanese telecom company, reduced its stake in Datasection from 9.5% to 3.7% between September and October 2025, while Nippon Life eliminated its 6.69% stake entirely by July 2026 (Compl. ¶4, ¶9). The complaint alleges that these reductions were directly influenced by the defendants' report and its false claims. The report also falsely asserted that Datasection's collaboration with KDDI ended in December 2024 due to the alleged illegal activities, despite KDDI's public statements indicating a strategic shift in its GPU procurement strategy (Compl. ¶4, ¶9).
The complaint also notes that Datasection switched auditors in June 2024, replacing PwC Japan with Amaterasu Limited Audit Company (Compl. ¶3). This change occurred shortly before Datasection announced a deal with KDDI, Supermicro, and Sharp to expand its AI data center capabilities. The defendants' report falsely claimed that Datasection's auditor switch was indicative of financial impropriety, despite no evidence supporting this assertion. The report stated, "We have heard that Japanese banks have proverbially slammed the door in CEO, Norihiko Ishihara’s face, apparently recognizing the scheme’s blatant illegality," a claim the complaint characterizes as baseless and defamatory (Report excerpt).
Timeline of Key Events
The complaint outlines a detailed timeline of events leading up to and following the publication of the defendants' report. In June 2024, Datasection was included in a KDDI-led AI data center collaboration and announced a partnership with Supermicro and Sharp. By August 2024, Datasection and NNJ announced the development of a joint AI cloud service, with an August 19, 2024 press release referencing the collaboration (Compl. ¶9, ¶13). However, the collaboration between KDDI and Datasection ended in December 2024, and KDDI announced a direct GPU deal with Hewlett Packard Enterprises (HPE) in June 2025 (Compl. ¶4, ¶9). The defendants' report later cited this shift as evidence of Datasection's declining business prospects, falsely claiming that KDDI's reduced stake was due to the alleged illegal activities rather than a strategic decision.
In July 2025, Datasection announced two significant GPU orders: 5,000 GPUs on July 4 and 10,000 GPUs via NNJ on July 10 (Compl. ¶2, ¶14). The complaint alleges that these orders were part of Datasection's plan to build a supercluster of NVIDIA B200 GPUs, with Tencent allegedly investing $272 million in the project (Compl. ¶21). The defendants' report, published on October 8, 2025, falsely claimed that these GPU orders were being illegally provided to Tencent, asserting that "what Datasection is doing here is illegal" and that the company was engaged in a "scheme’s blatant illegality" (Compl. ¶7, ¶65). The report further alleged that Datasection had "illegally [p]roviding" restricted NVIDIA GPUs to a blacklisted Chinese firm (Compl. ¶65). The report also falsely claimed that Datasection had concealed Tencent as its mystery customer, despite public announcements of the collaboration, stating, "Providing cutting-edge GPUs to China-owned firms is severely restricted and violates US export controls" (Compl. ¶26).
The defendants' report also falsely claimed that "We have already shared our findings with Japanese and US authorities," a statement the complaint characterizes as false and misleading (Compl. ¶32). The complaint alleges that no regulator contacted Datasection or confirmed any violation, and that the report was a "self-serving short-seller attack" (Compl. ¶39). The report's central thesis was based on industry rumor and unnamed sources, rather than verified documentation, and the defendants used plural pronouns ("we") to create the appearance of institutional rigor, potentially misleading readers (Compl. ¶44, ¶53). The report's disclaimer noted, "All expressions of opinion are subject to change without notice," a statement the complaint argues underscores the defendants' reckless disregard for the truth (Page 37).
Report's Dissemination and Immediate Harm
The defendants disseminated the report via X (formerly Twitter) and financial newsletters, including The Bear Cave and Activ8 Insights. The Japanese-language post on X was viewed over 1.3 million times, representing more than 1% of Japan's population, according to the complaint (Compl. ¶32). Reuters News also published an item flagging the report on October 12, 2025, further amplifying its reach (Compl. ¶12). The report's disclaimer noted, "Wolfpack is short the securities of, or derivatives linked to, the securities of the subject issuer," a statement the complaint argues demonstrates the defendants' financial conflict of interest (Page 36). The Bear Cave republished the allegations in its weekly roundup on October 12, 2025, further disseminating the false claims (Compl. ¶12).
The report's publication triggered immediate reputational and financial harm to Datasection. On October 8, 2025, the company's shares closed 14% lower at ¥1,899, and by the end of the week, the stock had declined 23.9%, reducing Datasection's market capitalization by billions of yen (Compl. ¶8, ¶32). A creditor filed an application for provisional attachment against Datasection's assets, which was granted, and key investors, including KDDI and Nippon Life, reduced or eliminated their stakes in the company (Compl. ¶81, ¶86). The complaint alleges that these actions were a direct result of the defendants' false and defamatory statements. The report falsely claimed that "what Datasection is doing here is illegal and we have contacted the appropriate authorities," a statement the complaint characterizes as baseless and defamatory (Compl. ¶29).
Datasection's Denials and Defendants' Refusal to Retract
Datasection issued a public denial of the allegations on October 8, 2025, stating that it complied with all applicable laws and regulations. The company's counsel sent a letter to Wolfpack Research on October 14, 2025, demanding a retraction, but the defendants refused, claiming the report was "accurate, well-sourced, and protected speech," according to the complaint (Compl. ¶37, ¶49). The report's disclaimer noted, "Wolfpack is short the securities of, or derivatives linked to, the securities of the subject issuer," a statement the complaint argues demonstrates the defendants' financial conflict of interest (Page 36). On October 22, 2025, Datasection's counsel sent a second letter disputing the legal premise of the report, but Wolfpack Research's counsel threatened further publications if Datasection pressed its claims, stating that they would continue to publish if the company pursued legal action (Compl. ¶50).
The complaint alleges that the defendants published the false statements with intent or reckless disregard for the truth, aiming to devastate Datasection's reputation and market value. The report used plural pronouns ("we") to create the appearance of institutional rigor, potentially misleading readers, and falsely claimed that Japanese banks had "proverbially slammed the door" in Datasection CEO Norihiko Ishihara's face due to the "scheme's blatant illegality" (Compl. ¶53, ¶65). The complaint further alleges that the defendants invented a non-existent BIS license requirement restricting NVIDIA GPU computing power to Chinese-owned companies, a claim that Barron’s later debunked (Compl. ¶45, ¶63). The report falsely stated, "Providing cutting-edge GPUs to China-owned firms is severely restricted and violates US export controls," a claim the complaint asserts was fabricated to manipulate Datasection's stock price (Compl. ¶26).
Claims and Requested Relief
Datasection's complaint asserts four claims for relief: defamation/defamation per se, trade libel, tortious interference with prospective contractual relations, and unjust enrichment. The company seeks compensatory and consequential damages in excess of $75,000, presumed and special damages for defamation per se, punitive damages, and restitution of all profits and gains obtained by the defendants through their alleged misconduct (Compl. ¶86). The complaint alleges that the defendants' profits were "directly tied to wrongful conduct" and obtained at Datasection's expense (Compl. ¶86).
Datasection also requests a permanent injunction requiring the defendants to retract and remove the report and related statements, as well as a prohibition on republishing false statements about the company. The complaint demands a jury trial and seeks pre-judgment and post-judgment interest, attorneys' fees, litigation expenses, and costs (Compl. ¶87). The requested relief includes the retraction of the report's false claims, such as the allegation that "what Datasection is doing here is illegal" and that the company was engaged in a "scheme’s blatant illegality" (Compl. ¶65).
Datasection denies all allegations made in the defendants' report, asserting that the company has complied with all applicable laws and regulations and that the defendants' claims are baseless and fabricated for financial gain. The complaint highlights that the defendants' report was disseminated widely, with the Japanese-language post on X viewed over 1.3 million times, and that the report's false claims were republished by financial newsletters and media outlets, including The Bear Cave, Activ8 Insights, and Reuters News (Compl. ¶12, ¶32).
The allegations described here are taken from the filing and remain unproven; no responsive pleading is reflected in the source document.
David Brunk is a civil litigation attorney. He can be reached at david@newmanbrunk.com.
From the Complaint Public Court Record
IN THE UNITED STATES DISTRICT COURT FOR THE EASTERN DISTRICT OF PENNSYLVANIA DATASECTION INC., Plaintiff, v. WPR LLC d/b/a WOLFPACK RESEARCH LLC, WOLFPACK CAPITAL PARTNERS MANAGER, LLC, WOLFPACK CAPITAL PARTNERS, LP, WOLFPACK CAPITAL PARTNERS GP, LLC, and DAN DAVID Defendants. Case No. __________________ Jury Trial Demanded Plaintiff Datasection Inc. (“Datasection”), by and through its attorneys, as and for its Complaint against WPR LLC d/b/a Wolfpack Research LLC (“Wolfpack Research”), Wolfpack Capital Partners Manager, LLC (“Wolfpack Manager”), Wolfpack Capital Partners, LP (“the Fund”), Wolfpack Capital Partners GP, LLC (“the Fund’s General Partner”), and Dan David (“David”) (collectively, “Defendants”), hereby state as follows: INTRODUCTION 1.This case arises from a coordinated short-and-distort scheme: Defendants took a short position in Datasection’s stock, falsely accused the company of serious export-control violations and made other false assertions, and then profited as the stock price collapsed—just as Defendants planned. 2.Datasection is a publicly-traded technology company, headquartered in Tokyo, that specializes in data and AI‑driven business solutions aimed at solving real‑world problems and enabling corporate transformation.
2 3.Due to the nature of Datasection’s business—including its reliance on tightly- controlled technologies—legal compliance is essential to Datasection’s relationships with investors, lenders, commercial counterparties, and government-facing stakeholders. 4.Defendants, a short-selling outfit whose business depends on driving down the market value of its targets, recognized that reality and sought to exploit it. They first positioned themselves to profit from a decline in Datasection’s share price. They then published and continue to publish a report falsely accusing Datasection of “illegally” providing restricted technologies to a supposedly “blacklisted” Chinese company, the focus of which was t
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