Chinese artificial intelligence company DeepSeek made headlines on Monday, sparking a massive sell-off in US tech stocks, with Nvidia's shares plummeting almost 20%. However, the real story behind the market chaos is a tangled web of unsubstantiated rumors and misinformation.

In China, the hype surrounding DeepSeek has sent shares of some public companies with supposed ties to it soaring. Huajin Capital and Zhejiang Orient, rumored to be DeepSeek investors, saw their shares jump by 10% on Monday, while research company Sublime China Information surged 20% for supposedly cooperating with DeepSeek on its AI models. These gains are the legal maximum daily increases allowed on Chinese exchanges.

However, the rumors appear to be baseless. Sublime China Information has denied any cooperation with DeepSeek in a disclosure, while Huajin Capital has denied investing in the AI company to a Chinese business news outlet. Zhejiang Orient has not responded to requests for comment, and there is no public evidence to suggest they are an investor in DeepSeek.

The rumors seem to have originated from unsubstantiated Chinese lists that have gone viral, claiming to show various publicly-traded companies tied to DeepSeek. However, DeepSeek, a private company, has never publicly announced any venture capital investments. Chinese corporate records also make no mention of VC firms on DeepSeek's capitalization table. Instead, its founder Liang Wenfeng is listed as the beneficial owner of all three entities that form DeepSeek.

DeepSeek is funded by the quant firm High-Flyer, where Wenfeng serves as CEO, and has no plans to fundraise, according to an interview with Chinese media outlet Waves last year. In a separate interview with the same outlet in 2023, Wenfeng revealed that he had discussions with different funding sources, but venture capitalists "seemed hesitant" about investing in a research-focused company, prioritizing commercialization instead.

The lack of transparency and due diligence in the market has led to a situation where unfounded rumors can have significant consequences. The incident highlights the importance of verifying information through credible sources before making investment decisions. As the AI industry continues to grow, it is essential for investors, analysts, and journalists to be cautious of misinformation and to prioritize accuracy.

DeepSeek did not respond to TechCrunch's request for comment, leaving many questions unanswered about the company's funding and investors. As the dust settles on this market chaos, one thing is clear: the need for responsible reporting and fact-checking in the tech industry has never been more pressing.