Argo Blockchain accused of misleading investors in class action lawsuit
Investors in crypto mining company Argo Blockchain have filed a class action lawsuit accusing the miner of making false statements and omitting key information during its 2021 initial public offering (IPO).
A recently filed lawsuit on January 26th targets Argo and several of its executives and board members. It claims the firm failed to disclose how exposed it was to capital constraints, power costs and network problems.
“The offering documents were negligently prepared and, as a result, contained untrue statements of material fact or omitted to state other facts necessary to make the statements not misleading,” the lawsuit said.
As a result, the investors claim that the business was “less sustainable” than they had been led to believe, leading to an overestimation of the miner’s financial prospects. The complaint noted:
“Had [the investors] had known the truth, they would not have bought or otherwise acquired said securities, or would not have bought or otherwise acquired them at the high prices paid.”
Argo released the relevant information on September 23, 2021, when the firm filed documents with the United States Securities and Exchange Commission (SEC) related to the IPO.
7.5 million shares were issued to the public on the same date at an offering price of $15, resulting in proceeds of $105 million before expenses.
Since then, the miner’s share price has taken a beating and is currently trading at $1.96 per share after falling as low as $0.36.
Cointelegraph requested comment from Argo, but did not immediately receive a response.
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The recent lawsuit comes just days after Argo regained compliance with Nasdaq’s listing rule on Jan. 23, which requires a company to maintain a minimum closing bid price of $1 for 10 consecutive trading days.
Argo has had to make some difficult decisions to cope with the ongoing bear market and tough conditions facing crypto miners. It announced on December 28 that it would sell its flagship mining facility, Helios, to investment manager Galaxy Digital for $65 million.
Crypto miners generally had a torrid year in 2022 – with high electricity prices, falling crypto prices and increased mining difficulties eating away at the bottom line.
