Grizzly Research is short shares of 2Crsi SA (FRA:52C).
- After selling its subsidiary “Boston Limited” in 2023, which generated more than 83% of its revenue, 2CRSi needed a turnaround story. Right at that time, its US subsidiary revenue suddenly boomed, despite historically generating only 3% of the total revenue in the region.
- Our research indicates that almost the entire revenue of 2CRSi is likely fabricated through an undisclosed related-party scheme. The big $610 million contract 2CRSi announced with an unnamed client, as well as other meaningful contract announcements, seem like a severe misrepresentation bordering on outright fraud.
- Our research indicates that most of 2CRSi’s US-related operations and announcements were fabricated with the help of Joseph Church, the person behind an ecosystem of fake companies, which includes the major contract client company.
- Church is a veterinarian with no data-center or related industry experience and poor financial resources. In 2023 and 2024, he created multiple companies and fake credentials that appear to have served as the basis for 2CRSi’s US announcements and projects. All the companies involved are headquartered in the small animal hospital that he co-owns in Plattsburgh, NY.
- Church has been working closely with 2CRSi since at least 2022, and multiple findings led us to believe that he has been a related party for many years. At multiple occasions, 2CRSi and Church’s companies mention each other’s assets or use marketing material interchangeably.
- We identified the unnamed client behind the $610 million contract, and the more recent $290 million purchase order, as being Church’s company “NewYork GreenCloud” (“NYGC”). NYGC was in reality created on the day of the contract announcement by 2CRSi. 2CRSi’s CEO appears as the “Co-founder” on NYGC’s fundraising presentation. NYGC’s website was entirely created and is hosted by 2CRSi’s IT department.
- Despite 2CRSi qualifying NYGC as a “leading data center operator”, the truth is that Church and its companies have never built nor operated a single data center. Church has been buying out old power plants at scrap value and used them to lure investors along with 2CRSi by making up stories about “green data centers”. In reality, all projects are based on wobbly projections, unknown future factors and require hundreds of millions in funding that the company does not possess.
- In an interview given by Church to the regional media, he explicitly states that the California data center-related operations, including the permitting, might start late 2027 in the best-case scenario, and over $1 billion of Capex is required to build it.
- NYGC will not get into talks with clients until 2028, and does not even know what kind of servers they will use at that time. For the moment, their sole operations relate to biomass power facilities and future funding pathway depends entirely on future clients signing. This directly invalidates 2CRSi’s announcement and statements around its major US contract and recent purchase order, scheduled for delivery in the next few months, which NYGC does not need for the moment.
- NYGC’s technical specifications are a marketing fantasy and seem simply impossible to achieve. Between an announced PUE (Power Usage Effectiveness) lower than the most efficient facilities in the world, biomass facility forecasted uptime higher than any peer and pyrolysis technology upgrades at unprecedented scale, NYGC’s project appears to be a made-up dream.
- Our due diligence including satellite images, site visits, communications with local officials as well as records of interviews with NYGC’s employees and Church himself also reveal that there is currently close to nothing taking place across other sites related to 2CRSi’s US operations and its recently created subsidiary “2CRSi Cloud Solutions”. This includes projects and announcements dating back to 2022 to today, some of them even disappeared from the company’s communications without explanation.
- We found more of 2CRSi’s announcements to be highly questionable, such as their participation to an EU AI Megafactory project, or their recent contracts in Munich, Canada, and New York.
- In conclusion, we believe 2CRSi has created a fraudulent structure in the US to fabricate a growth story to its investors. We believe investors, regulators and auditors have been deliberately deceived.
Introduction
2CRSi is a French technology group that designs, manufactures, and distributes high-performance, energy-efficient computer servers and data center infrastructure. Headquartered in Strasbourg, France, the company is listed on Euronext Paris.
The company and its stock look like a true success story. The stock increased sevenfold in the past year, on the back of exploding revenues. 2CRSi is now perceived as a prime opportunity to participate in the ongoing AI and related datacenter boom. Retail investors in France are excitedly discussing the company’s new announcements and progress.
The recent successes improved 2CRSi profile meaningfully, especially in France, which is of course excited about a French company making big strides in a new and exciting industry.
Unfortunately for everybody involved, we strongly suspect the majority of 2CRSi revenue and contract announcements to be a severe misrepresentation, which 2CRSi orchestrated through undisclosed related parties.
We do not say this lightly, but we had to conclude after our months-long investigation that 2CRSi is almost a complete fraud. We believe management has likely committed multiple counts of fraud and seems to have acted with the intent to severely mislead investors.
2CRSi’s US Revenues Exploded Just at the Right Time
We believe that 2CRSi US growth story, which supports most of its revenue, operations and future projections, is almost entirely fabricated.
This is not a coincidence; the company was in dire need of a turnaround after selling its subsidiary “Boston Limited” in 2023.
The story starts in 2023, after 2CRSi sold its subsidiary “Boston Ltd” which generated most of its revenue, as evidenced by their “Sale of Boston Ltd” announcement from August 2024, where 2CRSi stated:
“At the request of the French Financial Markets Authority, 2CRSi presents the figures allowing for a full understanding of, on the one hand, the financial impacts of the sale of Boston Limited that occurred on June 30, 2023, the amounts of which could not be disclosed during the publication of the 2022/2023 annual report, and on the other hand, the expected impacts on the fiscal year 2023/2024, which ended on June 30, 2024.”
Source: 2CRSi Press Release.
During the FY 2022-2023, Boston Limited generated more than 83% of 2CRSi’s total revenue. Therefore, before the FY 2023-2024, only a fraction of their revenue came from the US. Most of it came from Europe (U.K., Germany, France), as Boston Limited were operating mostly in Europe.
Source: Annual Report 2022-2023.
Note: This is revenue by shipping location.
Due to “unexpected operational and logistical challenges”, 2CRSi decided to sell Boston Limited to stop bleeding cash, shedding a lot of its revenue at the same time. As we see in the quote below, the €183.5 million became €34.7 million excluding Boston’s revenue.
“Focusing on a comparable 12-month period (from July 2023 to June 2024), revenue reached €167.6M, representing a substantial increase compared to the previous year’s €34.7M (excluding Boston and for a 12-month period from March 2022 to February 2023).” Source
The sale of Boston Limited was completed on June 30, 2023. After that, 2CRSi needed a turnaround story to keep its investors happy. It started with a sudden revenue growth in FY 2023-2024, which was supposedly concentrated in Asia, formerly generating only 5% of 2CRSi’s revenue.
“80% of Sales Driven by Artificial Intelligence – An International Reach It should be noted that the revenue for this period includes four months of activity from Boston Limited, which was sold in June 2023. Excluding this contribution, 2CRSi Group’s revenue amounts to over €175 million, with 12% in the EMEA region, 17% in North America, and 71% in Asia, covering a total of 31 countries.” Source
However, in the French FY 2023-2024 annual report, the company states that 50% of the revenue comes from the United States. It also shows that none of the revenue was generated in Asia. It looks like 2CRSi is disclosing inconsistent numbers here.
Source: Annual Report 2023-2024.
2CRSi had generated 3% of their total revenue in the US for the FY 2022-2023, yet the revenue in that region exploded the following FY 2023-2024.
Oddly, the H1 2024-2025 covering the period from July 1 to December 31, 2024 only saw €20.9M in revenue with a net income of 2.6M €. Only during the H2 2024-2025 2CRSi’s revenue started booming in the US.
“2CRSi anticipates revenue in excess of €200 million by the end of June 2025” Source
Coincidentally, during that period, the group did not generate any profits and came up with the following explanation.
“The gross margin for the fiscal year, and particularly for the second half, was temporarily impacted by the granting of an exceptional discount to one of the Group’s main clients in the United States, as compensation for a delivery delay.”
In the second half of 2025 2CRSi’s revenue reportedly exploded along with the stock price. 2CRSi reported an increase by over €180 million for revenue compared to the previous year.
The only announcement of contracts or agreements in North America matching this time span were the ones under the $610 million master contract first signed in January 2024. Historically, 2CRSi has announced even tiny $2m contract agreements, so the revenue growth in North America would seem attributable to the $610m master contract agreement.
Read the full report here by Grizzly Research.
