Investors in Bitcoin mining firm Argo Blockchain have slapped the firm with a class-action lawsuit, accusing it of making false claims pre-IPO.
The London-based firm raised $112.5 million in a September 2021 offering, selling 7.5 million shares to the public at a price of $15 each.
In a filing, the lawsuit alleged that documents submitted prior to the IPO contained “untrue statements” and that they were “not prepared in accordance with the rules and regulations.”
The suit also alleges that Argo downplayed risks surrounding its capital constraints, electricity, and network difficulties, and “misrepresented the truth about Argo’s finances and business prospects.”
The filing went on say that the firm produced 25% fewer Bitcoin in May 2022 compared to April 2022 because of the aforementioned increased network difficulty, higher electricity prices, and the disruption of mining operations at its Texas “Helios” facility.
Argo did not immediately respond to Decrypt’s request for comment.
Tumultuous times for Argo
Argo has been taking significant steps as of late to cut back on its expenditures and shore up its finances. It sold its Helios mining facility in Texas to Galaxy Digital for $65 million in late December 2022.
The deal also saw Argo receive a new $35 million loan from Galaxy, earmarked for the purposes of refinancing its existing debts.
Argo’s shares currently trade at around $1.96, roughly an 87% decline from the IPO date, though a step up from the $0.38 they once traded at on December 16, the stock’s recent bottom.
Though IPO investors in Argo have been undoubtedly left out of pocket, investing in many other miners would have produced a similar result.
Core Scientific, one of the industry's largest publicly traded Bitcoin miners, announced that it filed for Chapter 11 bankruptcy protection in Texas in late December 2022, while many others, such as Greenidge Generation, have entered into complex financial restructuring agreements.