December 5, 2022

Possible Lawsuit For Bitcoin Miner For Disclosing Financials Improperly

On Monday, a court filing revealed that a lawsuit was filed against Core Scientific, as the bitcoin miner did not disclose a number of adverse financial situations to its shareholders this year.

Mei Pang, shareholder, and plaintiff, said that the crypto mining firm had deliberately shared false information with its shareholders from March 3rd to October 28th this year.

The report

A report was published by Culper Research on March 3rd about Core Scientific, in which the investigative investment research firm disclosed that the company had embellished its profitability.

The report further revealed that the company had also entered into a dispute with its largest client, bitcoin mining firm Gryphon.

Gryphon did not have the funds required for purchasing mining rigs that could be hosted by Core Scientific at their data center.

After the report was published, there was a 9.4% drop in the stock price of Core Scientific, as it closed the day at $6.98, which was a loss of $0.72.

Since then, a number of details have come to light, which include a dispute of the company with Celsius Network, a crypto lending platform that has now gone bankrupt.

Lawsuit

On September 28th, this matter resulted in a lawsuit. The crypto lender claimed that it had delivered mining rigs to Core Scientific, but it had delayed their deployment.

It further alleged that the company had not supplied adequate power to the mining rigs, as mentioned in the terms of the contract.

Celsius also added that because of rising energy costs, Core Scientific had decided to implement a surcharge in order to pass on the said costs.

On October 27th, Core Scientific finally admitted that something was wrong. It said that since its financial condition had become uncertain, it was doubtful if the company would be able to continue its operations.

The day it hinted at bankruptcy, the share price of the company dropped to $0.789 or 78.1% and it ended the day at $0.221.

Not alone

Rising energy prices and the bear condition of the crypto market have put a lot of crypto mining companies in trouble.

Core Scientific is not the only mining firm in trouble. The company had to sell 7,202 bitcoins in June because it had to cover the huge overheads in light of the massive inflation.

July had been the second month in a row when the company had had to sell more bitcoins than it had been able to mine.

Greenidge Generation, another crypto mining firm, halted its plans of expansion in August and announced that the second quarter had resulted in a net loss of $107.9 million.

In September, Compute North had filed for bankrupt, which functions as a data center for mining companies.

Argo, another mining firm, also called off a fundraising round worth $27 million with an investor but did not disclose the reasons behind it.

The company has also been selling off its bitcoin reserves this year in order to cover its costs and keep up its balance sheet.