Investors at crypto mining firm Argo Blockchain recently filed a class-action lawsuit accusing the firm of making false statements and withholding key information during its initial public offering (IPO) in 2021.
The lawsuit, filed Jan. 26, is directed against Argo and several of its executives and board members. The lawsuit alleges the company did not disclose how subject to capital constraints, electricity costs and grid difficulties.
“The offering documents were negligently prepared and, as a result, contained misrepresentations of material facts or failed to state other facts necessary to render the statements made not misleading”reports the cause.
As a result, investors argue that the business was “less sustainable” than they had been led to believe, which has led to an overstatement of the company’s financial prospects. The complaint states:
“Had (the investors) known the truth, they would not have bought or otherwise acquired those securities, or would not have bought or otherwise acquired them at the inflated prices that have been paid.”
Argo released the information in question on Sept. 23, 2021, when the company filed with the U.S. Securities and Exchange Commission (SEC) documents relating to its IPO.
On the same date, 7.5 million shares were issued to the public at an offering price of $15, with proceeds of $105 million before expenses.
Since then, the miner’s share price has fallen sharply, currently trading at $1.96 per shareafter falling as low as $0.36.
Cointelegraph has requested a comment from Argo, but has not received a response.
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The recent lawsuit comes days after Argo regained compliance with the Nasdaq listing rule on Jan. 23, which requires a company to maintain a minimum closing price of $1 for 10 consecutive trading days.
Argo has had to make some tough decisions to cope with the ongoing bear market and challenging conditions for crypto miners. On December 28, 2022, he announced he would be selling his flagship mining facility, Heliosto digital asset investment manager Galaxy Digital, for $65 million.
Crypto miners, in general, had a tough 2022, with high electricity prices, declining cryptocurrencies and increasing mining difficulty dent their profits.
