Bitcoin Miner Marathon Digital Misled Investors, Plaintiffs Say
Marathon Digital Holdings is facing a class action lawsuit alleging it violated federal securities laws.
The Klein Law Firm has filed a complaint on behalf of Marathon Digital shareholders. It claims the company made false and misleading statements over nearly two years. Marathon allegedly failed to disclose information that would have had a material adverse effect on its financial condition.
Marathon Digital’s disclosures
Marathon Digital Holdings, Inc., is a company that supports and secures the Bitcoin ecosystem through mining. Miners use powerful computers to verify Bitcoin transactions on the blockchain and receive Bitcoin as a reward.
The complaint refers to the period from May 10, 2021 to February 28, 2023. It alleges that Marathon Digital overstated the effectiveness of its disclosure controls and procedures and internal control over financial reporting. This in turn led to the company misreporting its income and income costs in the period in question.
According to the lawsuit, the fraud has had a significant impact on the investors involved.
The shareholders who suffered losses thanks to Marathon have until 30 May 2023 to petition the court for the status of main plaintiff.
The Fortunes of Marathon
Marathon’s operational hash rate increased by 64% during the first quarter of 2023, from 7.0 exahashes to 11.5 exahashes, leading to a 41% increase in Bitcoin production from the previous quarter to a record 2,195 bitcoin in Q1 . The company also cut debt by $50 million and increased its unrestricted bitcoin holdings by 3,132 bitcoin during the quarter.
The firm has been struggling to ease debt burdens and release Bitcoin held as collateral. In March, the firm moved to end its relationship with the ailing Silvergate Bank, taking away its credit facilities.
In November 2021, Marathon’s stock price fell 27% following news of a Securities and Exchange Commission (SEC) subpoena. The agency launched an investigation into Marathon’s dealings with Beowulf Energy and alleged violations of securities laws.
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