After a volatile and severe 2022 that saw Argo Blockchain sell off its flagship mining facility, the company’s woes seem to be getting worse after a recent class action suit.
Investors of crypto mining company Argo Blockchain have filed a class action lawsuit accusing the miner of making some untrue statements and omitting critical information during its initial public offering (IPO) in 2021.
A newly filed lawsuit on January 26 is designed to aim at Argo and several of its executives and board members. It alleges that the company failed to reveal how susceptible it was to capital constraints, network challenges, and electricity costs.
The lawsuit read:
“The Offering Documents were negligently prepared and, as a result, contained untrue statements of a material fact or omitted to state other facts necessary to make the statements made not misleading.”
As a result, the investors allege that the business was ‘less sustainable’ than they had been led to think which resulted in an overstatement of the miner’s financial prospects. The complaint noted:
“Had [the investors] known the truth, they would not have purchased or otherwise acquired said securities, or would not have purchased or otherwise acquired them at the inflated prices that were paid.”
Argo released the information in question on September 23, 2021, when the company filed documents with the United States Securities and Exchange Commission (SEC) relating to its initial public offering (IPO).
7.5 million Shares got issued to the public on the same date at an offering price of $15 resulting in proceeds of $105 million before expenses.
Since then, the miner’s share price has taken a thorough beating and is now trading at $1.96 per share after having dropped as low as $0.36.
Reporters requested comment from Argo Blockchain but did not immediately get any response.
The recent lawsuit comes barely Days after Argo regained compliance with NASDAQ’s listing rule on January 23, which needs a firm to maintain a minimum closing bid price of $1 for 10 straight trading days.
Argo Blockchain has had to make some challenging decisions to weather the continuing bear market and tough conditions facing the crypto miners. It announced on December 28 that it would be selling its flagship mining facility, Helios, to digital asset investment manager Galaxy Digital for $65 million.
Crypto miners in general had a severe year in 2022 – with elevated electricity prices, dropping crypto prices, and increased mining difficulty all biting deep into their bottom line.