After selling its flagship mining facility in 2022, Argo Blockchain‘s troubles have worsened following a recent class action lawsuit.
Investors in Argo Blockchain, a cryptocurrency mining company, have filed a class action lawsuit, alleging that miners made false statements and omitted important information during their 2021 initial public offering (IPO).
A new lawsuit, filed on January 26, targets Argo and several of its executives and directors. The company claims not to disclose how vulnerable it was to capital shortages, power costs, and network problems.
“The offer materials were inadvertently prepared and as a result contain misrepresentations of material facts or fail to disclose other facts necessary to avoid misleading. I did,” the lawsuit reads. As a result, investors have exaggerated the miners’ financial prospects, claiming the deal is “less sustainable” than believed. The complaint states:
Argo made the information public on September 23, 2021, when the company was filing documents related to its IPO with the U.S. Securities and Exchange Commission (SEC).
On the same day, 7.5 million shares were issued to the public at his US$15 offering price, earning him US$105 million before expenses.
The miner’s stock price has suffered since then and is now trading at $1.96 per share after dropping as low as $0.36.
The latest lawsuit comes just days after Argo regained compliance with Nasdaq’s listing rules on January 23. Under this rule, a company must maintain a minimum bid of $1 in 10 consecutive trading days.
Argo has had to make some tough decisions to navigate the ongoing bear market and tough times for cryptocurrency miners. The company announced on December 28 that it would sell its flagship mining facility, Helios, to digital asset investment manager Galaxy Digital for $65 million.
High electricity costs, declining cryptocurrency prices, and greater mining difficulty all hurt the bottom line of cryptocurrency miners in general in 2022.