Hut 8 Faces Multiple Lawsuits From Shareholders Following Stock Crash

7 March 2024

in Mining

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Last updated:

March 7, 2024 09:45 EST
| 2 min read

The Bitcoin mining company Hut 8 recently faced a significant decline in share prices on the Nasdaq following accusations of short-selling by JCapital. In response, several law firms have offered to represent investors who suffered losses during this period.

While some lawsuits cater to individuals who suffer losses, others claim that all shareholders who purchased stocks during the timeframe are entitled to compensation.

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Hut 8 Faces Share Price Decline Amidst JCapital Allegations of Pump and Dump Scheme

A class action securities lawsuit was filed against Hut 8 Corp., seeking to recover the losses of shareholders who were adversely affected by alleged securities fraud between November 9, 2023, and January 18, 2024.

The decline in Hut 8’s share prices occurred on January 19, with a drop from $7.12 to $2.16 after the release of an unverified report by JCapital. The report, titled “The Coming HUT Pump and Dump, alleges that insiders were preparing to dump Hut 8 stock.

JCapital claimed that the firm’s November 30, 2023, $725 million merger deal with fellow Bitcoin miner US Bitcoin (USBTC) could put Hut 8 investors at risk. Additionally, the company highlighted in the report that the majority of the merged Bitcoin miner’s shares are held by an “undisclosed related party.” Hut shares fell by 23% after the report was published.

However, Hut 8 refuted these allegations on January 24, dismissing them as deliberate misinformation. Hut 8 responded to the allegations and issued a blanket denial, describing the report as misleading. The company said that it was a “deliberate attempt to spread misinformation” and was filled with inaccurate information and misrepresented data. The company also alleged that the report was “designed for the sole purpose of negatively impacting Hut 8’s share price for the short seller’s own benefit.”

Hut 8 Faces Class Action Securities Lawsuit Amid Allegations of Securities Fraud

As a result, investors who purchased Hut 8 stocks between November 9, 2023, and January 18, 2024, are being encouraged by various law firms to join efforts to seek compensation for their losses. These law firms are urging affected shareholders to reach out and serve as lead plaintiffs in pursuing legal action against Hut 8.

Some of the notable law firms include Kuznicki Law, The Gross Law Firm, Levi & Korsinsky LLP, Kirby McInerney LLP, Berger Montague, and many others. One of the law firms, Kuznicki Law, argues that Hut 8 and its executives violated federal securities laws by allegedly misstating financial information, which had a detrimental impact on the company’s share price.

The Levi & Korsinsky LLP lawsuit also stated that US Bitcoin Corp. (USBTC), a company that merged to form Hut 8, was an undisclosed related party. This relationship was allegedly not adequately disclosed to shareholders. The complaint further alleges that one of USBTC’s core assets has historically failed to provide energy and high-speed internet as promised. This failure was purportedly not adequately disclosed to investors.

While some lawsuits focus on individual losses, others propose collective action on behalf of all shareholders who purchased stocks during the specified timeframe. Furthermore, participating shareholders are assured that they will not be responsible for court fees due to contingency fee arrangements.

Following the allegation from JCapital Research, on February 7, the Miami-based Bitcoin mining company published a press release saying that its former CEO, Jaime Leverton, would depart from his position. Asher Genoot, the president and a member of the company’s board of directors, will replace the now-former executive.

In addition to the legal challenges, Hut 8 announced the closure of its mining site in Drumheller, Alberta, Canada, on March 6. The decision was attributed to various factors, including disruptions in power supply and escalating energy costs.

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