To The Moon

On October 7, 2026, $Webull Corp(BULL)$ experienced a sharp 19% drop, with a maximum decline of 23.32%. This unusual market activity was triggered by findings from a bipartisan congressional panel—reported by CNBC—indicating that the digital investment platform, which boasts 28 million global users, maintains structural ties to the Chinese government and poses a national security threat to the U.S. financial system.

CNBC reported on Wednesday, citing a report from the U.S. House Select Committee on the Chinese Communist Party, that the committee stated Webull's equity structure, technology, workforce, and data flows all have ties to China, and that the company therefore poses a national security risk. As a result, Webull's stock fell 20% in premarket trading, with the decline subsequently widening to nearly 30%!

According to the report, the committee alleged that Webull's operations in China could expose U.S. investors' data and funds to Chinese laws and requirements. Webull did not immediately respond to MT Newswires' request for comment. Among its peers, Robinhood (HOOD) fell about 3%, and Interactive Brokers (IBKR) declined roughly 2%, indicating that selling pressure has spilled over into the broader retail brokerage sector—but Webull's (BULL) losses far outpaced its competitors!

The Specific National Security Allegations: A Five-Dimensional Breakdown

The House Select Committee's report leveled accusations against Webull across multiple dimensions. Its core logic is that Webull markets itself as an American brokerage, yet its underlying structure has "structural ties" to China.

🔸 Allegation 1: Ownership Structure The report questioned Webull's ownership structure. Webull's founder, Anquan Wang, is the controlling shareholder, and the company is classified as a "controlled company" under Nasdaq's corporate governance rules, allowing it to rely on certain exemptions from Nasdaq's governance requirements. The report also noted that Webull is partially held by Gopher Asset Management, a subsidiary of Noah Holdings, a large Chinese investment firm.

🔸 Allegation 2: Technical Workforce The report stated that Webull has multiple employees registered with FINRA as brokers in Hunan, China. The committee argued that Webull publicly discloses its employment of Chinese nationals, and that its technical team has substantive ties to China—a "profound disconnect" from its branding as an American brokerage.

🔸 Allegation 3: Technology Infrastructure The report noted that Webull's back-end technology is subject to Chinese law, with its mainland China subsidiary responsible for the platform's technology and operations. Such laws could compel companies to cooperate with the Chinese government, granting authorities broad investigative powers.

🔸 Allegation 4: Cross-border Data Routing The report raised concerns about Webull's cross-border data routing. In its SEC filings, Webull stated that U.S. customers' sensitive personal and financial data is stored on U.S. servers and may not be transmitted outside the United States without U.S. personnel's permission. However, the committee questioned whether, given that the mainland China subsidiary is responsible for technical operations, the data could still face the risk of being accessed at the request of Chinese law.

🔸 Allegation 5: Direct Custody of Customer Cash (the Core Trigger) The report stated that the committee's concerns intensified significantly in October 2025, when Webull began holding customer cash directly rather than through third-party custody. The committee called this arrangement "a structural exposure of American capital," arguing that it could expose billions of dollars in U.S. customer funds to risks associated with Webull's structure and its Chinese ties.

Committee Chairman John Moolenaar stated that Webull's China operations place U.S. investors and their data at risk.

Webull's Official Response

In response to the allegations, a Webull spokesperson told CNBC that the report contains "significant inaccuracies and baseless conclusions," and that the company had not been contacted for clarification before the report was released.

The spokesperson emphasized: "Webull's U.S. operations are run from its global headquarters in St. Petersburg, Florida, and its New York City office, while U.S. customer data is stored in the United States, and access to sensitive customer data is controlled by U.S. personnel." The company stated that it remains prepared to respond directly to questions from the SEC, FINRA, and global regulators.

Notably, the committee's findings did not prove any wrongdoing. Some retail traders on Stocktwits questioned whether Webull's public disclosure of hiring Chinese nationals is sufficient to support national security concerns, and suggested the sell-off may be overdone.

Potential Implications for Webull's Future Development in the U.S. Market

🔸 Implication 1: Risk of Escalated Regulatory Scrutiny A congressional report carries no direct legal force, but it could serve as a catalyst for subsequent regulatory action. The report may prompt the SEC, FINRA, or the Treasury Department's Committee on Foreign Investment in the United States (CFIUS) to launch deeper reviews of Webull. The committee has already expressed explicit concerns about Webull's compliance framework, meaning future compliance costs will rise significantly.

🔸 Implication 2: Customer Trust and Capital Outflow Pressure Trust is the core of the brokerage business. When Congress publicly questions whether a brokerage could expose customer data and funds to a foreign government's laws, some institutional and retail clients may prudently move their funds to other platforms. This poses a direct threat to the user base and client assets on which Webull's growth depends. Data shows Webull's stock has already fallen nearly 50% over the past 12 months; market concerns did not begin today.

🔸 Implication 3: The Shadow of HFCAA Delisting Risk Webull has already listed the HFCAA (Holding Foreign Companies Accountable Act) as a risk factor in its prospectus: if the PCAOB is unable in the future to conduct complete inspections or investigations of its auditors, its ADSs could be delisted from U.S. exchanges and barred from over-the-counter trading. Although the PCAOB previously announced it was able to conduct complete inspections of auditors in mainland China and Hong Kong, the congressional report may push this risk back into the spotlight.

🔸 Implication 4: Hindered Strategic Transformation and Institutional Business Webull is actively expanding its institutional investor and B2B partner business, with institutional assets under management already reaching $1.4 billion. However, the congressional report may cause U.S. institutional clients to have reservations about partnering with Webull, particularly for businesses involving sensitive data and customer funds. This will directly impact Webull's strategic goal of transforming from a retail brokerage into a comprehensive financial platform.

Observations and Suggestions for Individual Investors

First, short-term volatility may persist. Following the release of the congressional report, market sentiment will need time to digest it. Webull's stock had already fallen nearly 30% in premarket trading, but retail sentiment in the premarket session had shifted from "bearish" to "bullish," with some investors believing the sell-off was excessive. The stock may continue to fluctuate in the short term; it is unwise to rush to buy the dip.

Second, watch for follow-up regulatory action. The congressional report itself is not binding; the key question is whether regulators such as the SEC and FINRA follow up. If formal investigations or enforcement proceedings emerge later, the impact will be far more profound. It is advisable to closely monitor Webull's subsequent filings with the SEC and statements from regulators.

Third, distinguish "political risk" from "fundamental risk." Webull's Q2 earnings showed strong growth in its core business, with revenue up 51% and an adjusted operating margin of 31.3%. Political risk may suppress its valuation, but it does not directly equate to a deterioration in business fundamentals. Investors need to distinguish between these two types of risk and avoid making emotional decisions.

Fourth, the divergence between Wall Street's target price and the current stock price is worth noting. Analysts' average price target is $12.75, which still implies considerable upside from the post-crash premarket price. However, note that analyst ratings may lag and may not fully reflect the latest political risk.

Summary

Webull's nearly 25% plunge is a "crisis of trust" triggered by the congressional report. From ownership structure, technical workforce, and technology infrastructure to cross-border data routing and direct custody of customer cash, the report systematically questioned Webull's "structural ties" to China. The core trigger was Webull's decision in October 2025 to begin holding customer cash directly, which the committee believes exposes billions of dollars of American capital to "structural risk exposure."

Webull firmly denies the allegations, saying the report contains "significant inaccuracies" and emphasizing that its U.S. operations and customer data are both run on American soil. However, the political influence of a congressional report should not be underestimated—it could lead to escalated regulatory scrutiny, customer trust erosion, hindered institutional business, and a repricing of HFCAA delisting risk.

For individual investors, the most important thing right now is to stay calm, closely monitor follow-up regulatory action, distinguish political risk from fundamental risk, and avoid making hasty decisions before the picture becomes clearer.

Tiger cubs, what do you think of the congressional report's allegations against Webull? Is this an "overreaction" or "justified risk repricing"? Feel free to share your thoughts in the comments~