A class-action lawsuit has been filed against a Nasdaq-listed bitcoin mining company. The suit cites a report claiming that the business is “completely fraudulent,” with nonexistent bitcoin mining operations.
Lawsuit Alleges Crypto Firm’s Bitcoin Mining Business Is ‘Completely Fraudulent’
A class-action lawsuit was filed on Wednesday in the Southern District Court of New York against Bit Digital Inc., its CEO Min Hu, and CFO Erke Huang.
Bit Digital, a holding company listed on Nasdaq under the symbol BTBT, purports to engage in bitcoin mining business through its U.S. and Hong Kong subsidiaries. Its name was changed from Golden Bull Ltd. (ticker DNJR) in September 2020.
The lawsuit cites a report by J Capital Research released on Jan. 11 alleging that Bit Digital operates “a fake cryptocurrency business,” which is “designed to steal funds from investors.”
J Capital alleges that Bit Digital’s claim that “it was operating 22,869 bitcoin miners in China” is “simply not possible.” The research firm stated that it had “verified with local governments supposedly hosting the BTBT mining operation that there are no bitcoin miners there,” adding:
We think the bitcoin business BTBT discloses is completely fraudulent.
Plaintiff Anthony Pauwels, individually and on behalf of all others who purchased Bit Digital securities between Dec. 21, 2020, and Jan. 8, accuses the defendants of violating the federal securities laws. They said that the defendants “made materially false and/or misleading statements, as well as failed to disclose material adverse facts about the company’s business, operations, and prospects.”
Following the publication of J Capital’s report, “Bit Digital’s stock price fell $6.27 per share, or 25%, to close at $18.76 per share on January 11, 2021, on unusually heavy trading volume,” the lawsuit details.
Local Chinese Authorities Never Heard of the Company
Bit Digital had previously…