Investors files lawsuit against Argo Blockchain, accuses miner of misleading
- The investors allege that Argo Blockchain made false statements and concealed key information during the 2021 IPO.
- The lawsuit accuses the miner of failing to disclose how susceptible it was to electricity costs, and network difficulties.
Bitcoin mining firm Argo Blockchain is facing a class action lawsuit filed by its investors. The investors allege that Argo Blockchain made false statements and concealed key information during its initial public offering (IPO) in 2021.
The lawsuit filed on January 26 accuses the miner of failing to disclose how susceptible it was to different elements, including capital constraints, rising network difficulties, and electricity costs.
“The Offering Documents were negligently prepared and, as a result, contained untrue statements of a material fact or omitted to state other facts necessary to make the statements made not misleading,” the lawsuit reads.
The filing claiming that the miner hid important information from investors adds, “Had the investors known the truth, they would not have purchased or otherwise acquired said securities, or would not have purchased or otherwise acquired them at the inflated prices that were paid.”
Reportedly Argo released the ‘information’ mentioned in the latest lawsuit on September 23, 2021, when the firm filed documents with the US Securities and Exchange Commission (SEC) with respect to its IPO.
Around 7.5 million shares were issued to the public on the same day at an offering price of $15, resulting in proceeds of approximately $105 million before expenses. The latest lawsuit comes three days after Argo Blockchain regained stock listing compliance with Nasdaq.
Rising energy costs and falling Bitcoin prices have made the past year extremely challenging for miners. In late December, Argo Blockchain announced that it would sell its Helios mining facility for $65 million and refinance a new asset-backed loan as a measure to avoid bankruptcy.
The liquidity issues had even forced Argo blockchain to suspend trading of its American depositary shares (ADS) on Nasdaq temporarily. The fall in bitcoin prices has largely been attributed to leading BTC mining firms that have struggled to remain profitable throughout the crypto winter, with many either filing for Chapter 11 bankruptcy protection, taking on debt/selling their BTC holdings and equipment in order to save themselves from bankruptcy.