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When Chinese University of Hong Kong professor Tang Xiao'ou and two of his PhD students from the mainland co-founded SenseTime in 2014, they could not have anticipated that their AI brainchild would be caught in hostile fire exchanges between the US and China.
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Following 5G-leader Huawei, chip maker SMIC and a number of other companies, SenseTime has become the latest Chinese technology firm to be blacklisted by the US.
SenseTime planned to raise as much as US$767 million but, due to the sanctions that bar American capital from flowing into the company, the IPO faces uncertainty.
This time around, it has little to do with national security - as the Americans have alleged in the case of Huawei or SMIC - but about alleged human rights violations.
The Biden administration senselessly claims SenseTime's advanced facial-recognition technology is widely used in Xinjiang to aid the mainland suppression of Uyghur Muslims.
The Hong Kong-headquartered AI company denied the accusations.
Sadly, Xinjiang has become an all-encompassing coat-hanger for so-called human rights abuses - an easy hook on which the US can dangle its many accusations against China.
Washington is always looking for any excuse to bad-mouth Beijing and, given the rapid advances in technology - particularly facial recognition - it will play every dirty trick in the book to stymie Chinese competition.
Nobody was surprised when Washington announced new sanctions against SenseTime last Friday, preceded with media leaks apparently timed to threaten investors against funding the AI company, which is headquartered in Hong Kong.
It was predictable that the US would take further action against SenseTime after first blacklisting its subsidiary - Beijing SenseTime - in 2019, restricting the unit's access to US supplies and technology.
The US Treasury Department went further on Friday, adding SenseTime to a list of so-called "Chinese military-industry complex companies" to make it unlawful for Americans to invest in it. Existing US stakeholders will have one year to sell their stakes.
This is all part of a geopolitical power struggle - and SenseTime will not be the last Chinese technology company to be added to the hit list.
Who will be the next target? The way international money lenders behave could be indicative.
International lenders reportedly avoided the SenseTime IPO - according to the Financial Times, HSBC is the only investment bank in the West involved in it.
The escalated sanctions could also pose an immediate dilemma for some SenseTime top backers, including US-based equity funds Tiger Global and Silver Lake. It is common for investment funds to invest in startups early, reaping the profits at a later stage.
Biden's blacklisting of SenseTime may well delay the course of the IPO but is unlikely to totally stop it from going public on the Hong Kong stock exchange.
Technically, SenseTime can overcome the new hurdle by increasing risk disclosure in the prospectus to warn investors about the dangers of investing in the company before proceeding with the IPO - albeit without the input of US capital.
It is more likely than not that SenseTime will continue its IPO exercise once it has updated the prospectus to protect itself from probable lawsuits.
But this latest move by the US against a company like SenseTime shows it is not only going too far, but also too low.
