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Trevor Milton, the founder of Nikola Corporation (NASDAQ: NKLA) voluntarily stepped down as executive chairman and a member of the company's Board of Directors amid continuing allegations of fraud, scrutiny of its technology, and his actions.

The Securities and Exchange Commission (SEC) and the Department of Justice (DOJ) are currently investigating allegations by Hinderburg Research that Nikola is another case of smoke-and-mirrors. The short-seller accused Milton of making an "ocean of lies" about the company's technology to establish partnerships with top automakers such as General Motors Company (NYSE: GM) desperate to catch up to Tesla Inc (NASDAQ: TSLA). 

Last week, Milton denied the short-seller's accusations and welcomed regulators' investigations into Nikola.

Milton intends to defend himself from accusations

In a statement on Sunday, Milton said he "made a difficult decision to approach the Board and volunteer to step aside as executive chairman."

He also stated, "Nikola is truly in my blood and always will be, and the focus should be on the Company and its world-changing mission, not me. Founding Nikola and growing it into a company that will change transportation for the better and help protect our world's climate has been an incredible honor."

In a post on Twitter, Milton wrote, "I intend to defend myself against false allegations leveled against me by outside detractors.

Nikola is experiencing a wild ride in the stock market

On June 4, Nikola started trading on NASDAQ as a Special Purpose Acquisition Company (SPAC). NKLA shares traded as much as $37 each and then settled around $34 each during its market debut. 

The company's initial public offering (IPO) was successful, reaching a valuation of $12 billion, higher than Ford Motor Company (NYSE: F). Milton's net worth increased to nearly $5 billion based on his stake in the company. 

This was an amazing phenomenon since Nikola has not generated any revenue since its inception. It only has few “concept” prototype vehicles that appeared to still be under construction.

On September 8, Nikola's stock price increased 45% after GM announced their merger deal, in which the Detroit-based automaker acquired 11% ownership in the Phoenix-based electric truck maker.GM's stock price rose 11%, driven by its announcement. 

Two days after the GM deal,  Hindenburg Research released its damning report detailing its damning allegations against Milton and Nikola. NKLA shares plunged in the days following the short-seller's allegations.

The stock was down almost 45% from its price of $50.05 per share on September 8 to $27.58 per share on Monday, September 21. From its trading price of $34.19 on September 18, NKLA plummeted 19.33%. 

It has been a wild ride for Nikola and the investigations are only a week old.

Chasing Tesla and hitting Hindenburg Research

Milton had an on-going war of words with Tesla CEO Elon Musk. He views Nikola as the only company in a position to compete with Tesla. He has always maintained that Nikola developed a zero-emission hydrogen fuel cell technology and it has a technology that will make hydrogen batteries affordable. 

The Hindenburg Research Report claimed that all Nikola has to offer is words. Perhaps the short-seller's most serious charge is that in 2018, Milton and his team rolled the NikolaOne down a hill. Then using creative camera-work, they claimed that the “fully functional’ NikolaOne was ready to market.  

Nikola is an “intricate fraud built on dozens of lies throughout its Founder and Executive Chairman Trevor Milton’s career," alleged Hindenburg Research. 

In a long rambling statement, Milton responded and called Hindenburg Research's allegations as  “false and defamatory.” However, he couldn’t dispute some of their most damning accusations and admitted that “Nikola never stated its truck was driving under its propulsion in the video.” In other words, the truck was coasting in-neutral down the highway.

According to Nikola, Stephen Girsky, the former vice chairman of GM and a member of its Board will replace Milton as executive chairman, effective immediately.

“We remain committed to delivering on our objectives and creating value for our shareholders,” said Mark Russell, Nikola’s Chief Executive Officer said in a statement.

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