On the 26th of January, investors filed a class-action lawsuit against Agro Blockchain, a Bitcoin mining firm, for misrepresented pre-IPO finances. In the filing, investors accused Argo Blockchain, a London-based crypto firm that raised more than $112 million in September 2021, made false claims pre-IPO. The lawsuit alleged that documents submitted by Agro Blockchain before the IPO contained untrue statements. According to the filing, the document submitted was not prepared following the regulations and rules.
The lawsuit alleged that the Bitcoin mining firm downplayed risks surrounding its network, capital constraints, and network difficulties. In the lawsuit, investors alleged that Agro Blockchain misrepresented the truth about their finances and business prospects. According to the filing, Agro produced 25% fewer Bitcoin in May 2022 compared to April 2022 because of the higher electricity prices, the aforementioned increased network difficulty, and the disruption of mining operations at its Helios facility, which is in Texas. However, regarding this class action lawsuit, Agro did not respond officially.
On the other hand, Agro Blockchain has been struggling with its financial health, as it has been taking significant steps to cut back on its expenditures and fill up its finances. Last December, the Bitcoin mining firm sold its Texas-based Helios mining facility to Galaxy Digital for around $65 million. With this deal, Agro also received a new $35 million loan from Galaxy, which the mining firm used to refinance its existing debts. Currently, the share price of Agro is around $1.96, around 87% low than the IPO date.
Argo Blockchain’s IPO investors have undoubtedly been left out of pocket, and if they invested in other miners, they would have produced a quite similar result. Last December, Core Scientific, a Bitcoin mining firm, filed for Chapter 11 bankruptcy protection in Texas. And several other mining companies, including Greenidge Generation, have entered into complex financial restructuring agreements.
