Jan 27, 2023
Bitcoin Miner Argo Hit With Lawsuit Over ‘Misleading’ US IPO
(Bloomberg) -- A class-action lawsuit has been brought against Argo Blockchain Plc, accusing the British Bitcoin miner of misleading investors during its US initial public offering in 2021.
The miner allegedly made false or misleading statements and failed to disclose that it was facing significant capital constraints, electricity costs and network issues, according to the Jan. 26 court filing. That in turn hampered Argo’s ability to mine Bitcoin, execute its business strategy, meet obligations and operate its Helios mining facility in Texas, claims the suit.
“As a result, Argo’s business was less sustainable than Defendants had led investors to believe,” reads the filing. “Accordingly, Argo’s business and financial prospects were overstated.”
The miner’s American depositary shares are listed on NASDAQ. The shares have tumbled by nearly 90% since Bitcoin’s last bull run in November 2021.
The London-based company operates Bitcoin mining facilities across North America. It had planned to complete its 800-megawatt mining farm in Dickens County, Texas, last year, but experienced a liquidity crunch, warning in October that if new financing wasn’t secured, it would need to “curtail or cease operations.” It agreed to sell the facility to Galaxy Digital Holdings Ltd. in December to help improve its liquidity.
The company is among a slew of publicly traded crypto-mining businesses struggling to stay afloat after a plunge in Bitcoin’s price plus soaring energy costs. Core Scientific, the largest Bitcoin miner by computing power, filed for bankruptcy last year in part due to its mounting debt, while facing its own lawsuit that alleges the miner failed to disclose certain information or issued misleading statements to its investors.
Argo said it has not received notice of any lawsuit and is therefore unable to comment. Core Scientific did not respond to a request for comment before press time.
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