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Hut 8 Investors Offered Legal Support After Bitcoin Miner Stock Crash

Last Updated March 7, 2024 3:40 PM
Eddie Mitchell
Last Updated March 7, 2024 3:40 PM
Key Takeaways
  • Hut 8 faces multiple lawsuits following the firm’s stock plummeting.
  • Lawsuit claims are based on an investigative report that alleges foul play at Hut 8.
  • The mining company has recently shuttered its Canadian mining unit for separate reasons.

Prominent cryptocurrency mining company Hut 8 has found itself in the crosshairs of multiple lawsuits that allege a short-selling plot, and securities fraud that resulted in the stock crashing

The news comes as Hut 8 announces the closure of multiple crypto mining sites as it attempts to restructure and optimize its finances, despite a significant uptick in the crypto market.

Hut 8 Lawsuits

Hut 8 is in hot water with multiple lawsuits now levied against the company following a troubling report that alleged foul play, insider trading, and other troubles arising from its recent $735 merger with mining company, U.S. Bitcoin Corp (USBTC).

Following the release of an unverified report titled “The Coming HUT Pump and Dump” from J Capital Research on January 18, 2024, the stock price of the mining company briefly tanked around 23%.

As a result, Hut 8 is accused of placing investors in harm’s way  through a string of bad decisions, over-reporting their capabilities, misstating certain aspects of their finances, and violating securities laws.

One law firm, Kuznicki Law PLLC, writes :

“Hut 8 and certain of its executives are charged with failing to disclose material information during the Class Period, violating federal securities laws.”

The JP Capital Report

J Capital Research claims  that USBTC is “backed by promoters with a history of legal trouble” which includes a loan default and two government fines, with one of those being for violating securities laws . Furthermore,

The report takes aim at the firm’s $725 million merger deal with another Bitcoin mining company USBTC, which lawyers believe placed Hut 8 investors in a dangerous situation.

Responding to the short-selling allegations, Hut 8 wrote :

“The report appears to represent a deliberate attempt to spread misinformation about Hut 8, its operations, finances, management practices, and key executives. The statements made by the short seller expose an inadequate, distorted understanding of the Company, its operations, and its key executives.””

Furthermore, the JCapital report notes that a large shareholder in USBTC is an undisclosed party, as well as overstating their mining capabilities, the report writes:

“Ultimately, we strongly believe that [HUT} shareholders are likely to feel the pain of being on the wrong side of an over-levered pump-and-dump, only to be left holding the most inefficient Bitcoin miner, which is unprofitable even at a Bitcoin price of over $60,000,”

Mining Sites Closing

In a rather timely fashion, Hut 8 is closing down its mining site in Drumheller, Alberta, Canada, citing rising energy costs and power supply issues.

As per the official March 6, 2024 press release , the move comes as part of an effort to streamline and restructure operations, as well as bolster financial performance amongst other aims.

The Drumheller site became particularly pressured following “underlying voltage issues” amid an energy price crisis, which spurred Hut 8 to cease operations and retire inefficient miners. Hut 8 states that it will relocate efficient miners to the site, of which it  maintains a lease over, with the option to re-energize the site “if market conditions improve.”

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