Bitcoin Miner Core Scientific Facing Lawsuit For False Financial Disclosure

Bitcoin Miner Core Scientific Facing Lawsuit For False Financial Disclosure

Crypto mining company Core Scientific has been hit with a lawsuit after failing to disclose a number of unfavorable financial matters in its statements to shareholders this year, according to a court filing delivered on Monday.

Plaintiff and shareholder Mei Pang alleges that the company knowingly provided false information to its shareholders throughout the period beginning on March 3 this year and ending on October 28.

On March 3, investigative investment research firm Culper Research published a report revealing that Core had “overstated profitability” and had entered into a dispute with Bitcoin miner Gryphon, Core’s largest customer. Gryphon lacked the money to buy the necessary mining rigs for Core Scientific to host in the data center.

That day, after the report was published, Core Scientific’s share price quickly fell 9.4%, or $0.72, to close at $6.98.

Several revelations emerged during the year, including one dispute with now bankrupt lender Celsius which triggered trials on 28 September.

Celsius claimed that Core Scientific, which uses its data center to host clients setting up their own mining operations, delayed the deployment of rigs that Celsius had supplied to it, and supplied less power to the rigs it had deployed than required under the contract terms.

Celsius also claimed that Core had imposed an inappropriate surcharge to pass the buck in the face of rising energy costs.

Core Scientific finally disclosed on October 27 that something was amiss: “given the uncertainty regarding the company’s financial condition, substantial doubt exists about the company’s ability to continue as a going concern.”

On the day of bankruptcy warningthe company’s share price fell 78.1% to $0.789 and closed at $0.221 per share.

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Core Scientific did not immediately respond Decryptits request for comment.

Nuclear science not alone

Many crypto miners have struggled to stay afloat amid a bearish climate and rising energy prices.

In June, Core Scientific sold 7,202 Bitcoin ($165 million) last month at an average price of $23,000. The massive sales were to cover increased fixed costs at a time of “historical inflation“, said CEO Mike Levitt.

July was it second month in a row that Core Scientific had sold more Bitcoin than was mined.

In August, controversial Bitcoin miner Greenidge Generation reported net loss of $107.9 million in the second quarter and halted plans to expand into Texas.

Compute North, primarily a data center for mining companies, filed for chapter 11 bankruptcy in September.

Mining outfit Argo recently canceled one 27 million dollars raise with an unnamed investor without giving reasons. Like many miners this year, Argo has been dumping Bitcoin reserves in an attempt to inflate the balance sheet.

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