Bit Digital, a Bitcoin mining company traded on the Nasdaq stock exchange, is the subject of a class action lawsuit alleging that the company is the size of its Bitcoin (BTCmining activities.
According to the lawsuit, it was archived in the Southern District of New York District Court on Wednesday by Prosecutor Anthony Pauwels, Bit Digital misled investors and made materially false claims about the scale of its Bitcoin mining activities, causing significant financial damage to investors.
In particular, the plaintiff refers to a research report from J Capital Research that claims Bit Digital simply lied about Bitcoin mining companies operating all over China. The company’s website claims that there are currently more than 40,000 mining rigs in operation, with a hash rate of 2,253 petahashes per second, and have successfully extracted more than 1,500 BTC since early 2020.
However, J Capital researchers say they contacted government officials in the Chinese provinces in which Bit Digital claims to operate but found that no one had ever heard of them.
When J Capital’s research hit the headlines, Bit Digital’s stock price plummeted 25%. From BTBT’s peak valuation of $ 29.27 in early January, the stock price has since fallen 44% to its current valuation of about $ 16.
On Tuesday, Bit Digital issued a response to the claims of J Capital, who pointed out that the company had filed all of its documentation with the Securities and Exchange Commission and had always endeavored to keep investors and regulators informed of accurate data.
However, the plaintiff in the lawsuit against Bit Digital says that the company’s executive leadership – CEO Min Hu and chief financial officer Erke Huang – were able to dictate the content of all documents related to running the company:
“Because of their position with the company, [Hu and Huang] possessed the power and authority to audit the contents of the company’s reports to the SEC, press releases and presentations to securities analysts, money and portfolio managers, and institutional investors, ie, the market. “
Pauwels is demanding reparations for the 1,000 units of Bit Digital stock he purchased on December 12, 2020 at a price of $ 21.81 each, as well as other compensatory damages, court fees and expenses.
The plaintiff has demanded a jury trial. Bit Digital has not provided a legal response at this time, nor has the company responded to Cointelegraph’s request for comment.