Argo Blockchain hit with class action lawsuit over IPO misinformation
Argo Blockchain is accused of failing to disclose that its business was highly susceptible to electricity costs and network difficulties.
Argo Blockchain investors have filed a lawsuit alleging that the crypto miner made misleading statements and concealed important information during its initial public offering (IPO) filing.
The Texas-based Bitcoin mining firm went public on Sept. 23, 2021, after submitting the required documents to the U.S. Securities and Exchange Commission (SEC).
During its IPO, Argo issued about 7.5 million ADS shares at an offering price of $15, bringing in proceeds of approximately $105 million to the mining firm.
However, a Jan. 26 lawsuit by early Argo Blockchain investors alleged that the crypto miner made misleading information during its IPO registration.
Investors accuse Argo
The investors accused Argo Blockchain of failing to disclose that its business was highly susceptible to electricity costs and network difficulties.
For context, Argo Blockchain accidentally revealed that it was preparing to file for bankruptcy back in Dec. 2022. Further investigation revealed that its financial woes were linked to high electricity prices which went as high as $0.06 per kWh — which would cause the firm around $12.400 to mint 1 BTC.
Argo Blockchain negligently prepared its IPO documents which concealed vital information that would affect its business profitability, alleged the lawsuit.
Investors claimed that if Argo Blockchain had not concealed such important information, they would not have purchased the securities or acquired them at the inflated prices that were paid.
Available data shows that Argo Blockchain’s share price is below $0.2 — indicating a 98% decline from the offering price of $15.
In the wake of the prolonged bear market, Argo Blockchain reportedly sold its Helios facility to Galaxy Digital. As a result, its mining revenue fell to $2.49 million, while its debt amounted to $79 million at the end of Dec. 2022.