Phantom Bitcoin mining company to face class-action lawsuit in US

Phantom Bitcoin mining company to face class-action lawsuit in US

Investors sued Nasdaq-listed mining company Bit Digital for lying about the presence of its own mining farms in China

Nasdaq-listed mining company Bit Digital has been sued on charges of falsely reporting the size of its Bitcoin (BTC) mining equipment.

According to the lawsuit, which was filed Wednesday in the Southern District of New York by Anthony Pauwels, Bit Digital allegedly misled Cryptosoft investors and released false information about its business, causing significant financial harm to investors.

Specifically, the plaintiff refers to an investigative report by J Capital Research, which alleges that Bit Digital lied outright about having Bitcoin mining farms in operation throughout China. On its website, the company claims to have over 40,000 mining facilities currently in operation, with a hashrate of 2,253 petahashes per second, having successfully mined over 1,500 BTC since the beginning of 2020.

However, J Capital’s researchers claim to have contacted government officials in the Chinese provinces where Bit Digital claims to operate, only to find that no one had ever heard of them.

When J Capital’s research was published in the newspapers, Bit Digital’s share price plummeted by 25%. Since BTBT’s valuation peak of $29.27 in early January, the share price has fallen 44% to its current valuation of about $16.

Exchange Commission and has always sought

On Tuesday, Bit Digital issued a statement in response to J Capital’s claims, pointing out that the company has submitted all documentation to the Securities and Exchange Commission and has always sought to update investors and regulators with accurate data.

However, the plaintiff in the lawsuit against Bit Digital claims that the company’s leadership, particularly CEO Min Hu and CFO Erke Huang, could alter the content of all documents related to the management of the business:

„Given their roles in the company, [Hu and Huang] possessed the power and authority to control the content of reports sent by the company to the SEC, press releases and presentations to securities analysts, money and portfolio managers and institutional investors, essentially the entire market.“

Pauwels is seeking damages for the 1,000 Bit Digital shares he purchased at a price of $21.81 each on December 12, 2020, as well as other general damages and court costs.

The plaintiff has also requested a jury trial. Bit Digital has not yet released legal documents to refute Pauwels‘ claims, nor has the company responded to Cointelegraph’s request for comment.