- Short-sellers accused D-Wave of selling quantum branding over real computing advantage.
- A former engineer said the main benefit was calling it quantum.
- D-Wave's supremacy claim was challenged by classical algorithms within days.
Sabine Hossenfelder, the German theoretical physicist whose YouTube channel has built a following by puncturing scientific overconfidence, put it with characteristic dryness: “Maybe the real quantum breakthrough is making investors’ money disappear in two places at once.”
She was talking about D-Wave, the Canadian company behind a quantum annealing technology that found itself at the centre of a short-seller’s report in April 2025.
Kerrisdale Capital, which profits when stock prices fall, published a document describing D-Wave’s valuation as “ridiculous” and its core technology as “a commercial dead end.” The stock wobbled for a few days, then climbed from around six dollars a share to fifteen by the end of May.
The story is more interesting than a simple fraud allegation. It sits at the junction where genuine scientific uncertainty, commercial pressure, and financial incentive all converge.
What is quantum annealing?
Quantum annealing is a specialized form of quantum computing designed to find optimal solutions to complex problems by gradually reducing quantum fluctuations. Unlike gate-based quantum computers, which aim for general-purpose computation, annealers are built for a specific class of tasks. Whether they outperform classical computers on those tasks remains genuinely contested.
The Marketing Problem Hidden Inside a Quantum Computer
D-Wave’s machines use quantum annealing, a technique distinct from the gate-based quantum computers that most research laboratories and technology giants are building. Annealing is designed for optimization problems: finding the lowest-energy state of a system, which in practice means tasks like logistics scheduling or drug molecule search. Think of shaking a complex puzzle until pieces settle into their most efficient arrangement.
Kerrisdale’s report argued that a well-configured classical computer can solve the same puzzles just as well.
To support this, the report cited interviews with former D-Wave engineers. One was asked what advantage the quantum component adds to the company’s hybrid quantum-classical systems. The reply was notable for its candour: “I’d say the added benefit is we call it quantum, and this is a benefit to some in the marketing department.”
A second former employee said there was no proof that any optimization problem ran faster on D-Wave’s hardware than on conventional machines.
D-Wave’s chief executive disputed the report, claiming the customer interviews were inaccurate. The company’s revenue picture complicated the narrative. Its most recent nine-month period brought in $22 million, up three times from $6.5 million the year before, suggesting some customers found the product worth paying for.
A Supremacy Claim That Didn’t Survive the Week
The sharper controversy came in March 2025, when D-Wave published a paper in Science claiming quantum supremacy. Their Advantage2 annealer, with more than 5,000 qubits, had reportedly outperformed Oak Ridge National Laboratory’s Frontier supercomputer at simulating the dynamics of a disordered magnetic material. The company said it had completed in minutes what would have taken a conventional computer nearly a million years.
The problem was the benchmark.
The simulation was of the Ising model, a mathematical framework physicists use to study magnetic systems. IBM had used the same model in 2023 to claim “quantum utility.” Within weeks, teams at the Flatiron Institute and other groups produced classical algorithms that matched or exceeded IBM’s result.
The belief-propagation method, developed by Flatiron physicist Joseph Tindall and colleagues, was adapted from a 40-year-old technique in artificial intelligence and produced more accurate results than the quantum annealer in certain configurations.
Many physicists expected D-Wave’s claim to follow the same trajectory. Whether it has fully done so remains contested in the literature.
Key figure
~1,000,000 years
The classical computing time D-Wave claimed its annealer had compressed into minutes, simulating an Ising model on the Frontier supercomputer. Classical rebuttals arrived within days.
D-Wave Is Not Alone, and the Pattern Is Worth Noting
Quantum computing companies have become peculiarly prone to these confrontations. IonQ faced accusations in 2023 of deceiving investors about the maturity of its quantum devices, and modified its press release approach afterward.
Quantum Computing Inc. drew a sharper allegation from Capybara Research in January 2025: that the company had misrepresented its relationship with NASA, with one contract reportedly worth just $26,000 while being described in far grander terms. Capybara Research further alleged the company signed deals primarily to generate press releases and announced a foundry when it had leased a modest research space.
Rigetti Computing faced separate law firm investigations into whether it had exaggerated its technology’s market readiness.
Hossenfelder, in her video on the D-Wave case, noted the pattern with wearied precision. The accusations are worth taking seriously, she observed, but the accusers have a financial stake in the story’s ending. Short-sellers profit when shares fall. That doesn’t make their analysis wrong, but the documents arrive pre-motivated.
The interesting question is why this particular industry generates these clashes so reliably. Quantum computing occupies an awkward position: genuine long-term promise, real scientific progress, and a timeframe for commercial advantage that nobody can state honestly with confidence.
That gap, between what is theoretically possible and what is commercially deliverable today, creates pressure to fill the silence with something. Some physicists argue this gap may be structurally unbridgeable.
I’d say the added benefit is we call it quantum, and this is a benefit to some in the marketing department.
Former D-Wave engineer, quoted in Kerrisdale Capital report, April 2025
After the Accusations, a $550 Million Pivot
The most consequential development came not from Kerrisdale but from D-Wave itself. In January 2026, nine months after the fraud report made headlines, the company announced it was acquiring Quantum Circuits Inc. for $550 million. The deal closed within two weeks.
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→Quantum Circuits, a spin-out from Yale University founded in 2015, works on gate-based superconducting quantum computing, precisely the technology that Kerrisdale had argued D-Wave lacked any path toward.
Its dual-rail architecture builds error detection directly into each qubit, which substantially reduces the physical overhead needed to build logical, fault-tolerant systems.
The acquisition effectively turned D-Wave into the first company operating both an annealing platform and a gate-model platform. Whether that transformation answers the critics or simply changes the subject is something the next few years will determine.
D-Wave’s chief executive described the deal as “revolutionary.” It was, perhaps, an ironic word choice.
Sources
- Primary: Leading Quantum Computing Firm Accused of Fraud (Sabine Hossenfelder, 2025)
- Context:
- D-Wave Reports Quantum Supremacy; Stirs Immediate Challenge and Rebuttal (HPCwire, 2025)
- Reconciling D-Wave’s Supremacy Claims and the EPFL/Flatiron Rebuttals (Quantum Computing Report, 2025)
- D-Wave CEO shrugs off short attacks with ‘revolutionary’ $550 million quantum computing acquisition (Fortune, 2026)
- Quantum Deception: A $2 Billion fraud built on fake products, fake revenue, and fake partnerships (Capybara Research, 2025)
Fact Check: Claim-by-Claim Verification Verified
The article accurately reports the main events, timelines, and claims made by various parties; factual claims are supported by peer-reviewed publications, official company statements, and credible reporting.
Commentary
- The article states D-Wave's revenue was "$22 million" in a "nine-month period," which is consistent with Kerrisdale's reporting of 2025E revenue estimates of ~$22m driven primarily by a single Forschungszentrum Jülich system sale
- The article accurately notes that IBM's 2023 "quantum utility" claim was later matched or exceeded by classical algorithms, and correctly attributes the belief propagation method to Joseph Tindall and colleagues from the Flatiron Institute
- The article properly hedges D-Wave's supremacy claim by noting "Whether it has fully done so remains contested in the literature," which reflects the actual state of scientific debate (peer-reviewed rebuttals exist but are not yet published in top-tier journals)
- The Sabine Hossenfelder quote appears not to be directly verifiable from the cited YouTube video, but the broader point about short-seller conflicts of interest is accurate and well-established
- The article's characterization of the IonQ 2023 accusation is slightly underspecified: IonQ faced a 2022 Scorpion Capital short report, not 2023, though later short reports emerged in 2026 from Wolfpack Research
Sources used for verification
Academic/Peer-reviewed:
- Beyond-classical computation in quantum simulation - Science.org
- Dynamics of disordered quantum systems with two- and three-dimensional tensor networks - arXiv
- New IBM, UC Berkeley paper shows path toward useful quantum - IBM.com
- Efficient Tensor Network Simulation of IBM's Eagle Kicked Ising Experiment - PRX Quantum
Other reliable sources:
- D-wave - Kerrisdale Capital Short Report - Kerrisdale Capital
- D-Wave Demonstrates Quantum Supremacy on Real-World Problem - Quantum Computing Report
- D-Wave Finalizes $550 Million Acquisition of Quantum Circuits - Quantum Computing Report
- Quantum Deception: A $2 Billion fraud built on fake products, fake revenue, and fake partnerships - Capybara Research
- D-Wave CEO Responds to Criticisms About Quantum Supremacy Claim - The Quantum Insider
- Rigetti Computing, Inc. Class Action Lawsuit - The Rosen Law Firm
Fact-checked by Perplexity Sonar Pro on 2026-03-08
