Argo Blockchain investors have filed a lawsuit alleging that the crypto miner made misleading statements and withheld important information during its initial public offering (IPO).
The Texas-based bitcoin mining company went public on September 23, 2021 after filing required documents with the US Securities and Exchange Commission.
During its IPO, Argo issued approximately 7.5 million ADS shares at an offering price of $15, generating approximately $105 million in proceeds for the mining company.
However, a Jan. 26 lawsuit by early Argo Blockchain investors alleged that the crypto miner made misleading information during its IPO registration.
Investors accuse Argo
The investors accused Argo Blockchain of not disclosing that its business was highly vulnerable to electricity costs and network difficulties.
For comparison, Argo Blockchain inadvertently revealed that it was preparing to file for bankruptcy as early as December 2022. Further research revealed that its financial woes were linked to high electricity prices of up to $0.06 per kWh — which would earn the company around $12,400 per 1 BTC minted.
Argo Blockchain was negligent in preparing its IPO documents, which contained important information that would affect the company’s profitability, the lawsuit alleged.
Investors claimed that if Argo Blockchain had not withheld such important information, they would not have bought the securities or acquired them at the inflated prices that were being paid.
Available data shows that Argo Blockchain’s share price is below $0.2, indicating a 98% drop from the $15 offering price.
Amid the ongoing bear market, Argo Blockchain reportedly sold its Helios asset to Galaxy Digital. As a result, its mining earnings dropped to $2.49 million while its debt was $79 million at the end of December 2022.
Posted in: US, Law, Mining
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