Argo Blockchain has been charged with violation of federal securities law during the initial public offering (IPO) of its U.S. depository shares (ADS) in 2021, according to a filing in the U.S. District Court for the Eastern District of NY.
The latest development is another blow to Argo, which was struggling to stay afloat in the midst of a brutal crypto winter. The complaint alleged that the company negligently prepared its IPO documents that concealed crucial details that would affect the profitability of its business.
Lawsuit against Argo
in class action lawsuit, Argo Blockchain investors have accused the firm of making false statements and omitting key information, thereby failing to disclose its limitations on capital, electricity and other costs, in addition to network difficulties. The filing said the restrictions hampered its ability to mine Bitcoin and operate its Helios facility in Texas.
The argument centered on the fact that Argo’s business was less sustainable than investors believed. They also alleged that the business and financial prospects of the company were exaggerated. As a result of “unfair acts and omissions” by Argo, investors were the recipients of significant losses.
“The Offering Documents were prepared negligently and, as a result, contained misrepresentations of material facts or failed to state other facts necessary so that the statements made would not be misleading and were not prepared in accordance with the rules and regulations governing their preparation. ”.
During its initial public offering, the London-based miner issued around 7.5 million ADS shares at an offer price of $15, resulting in proceeds of approximately $105 million for the mining company. However, the stock price has plummeted tremendously since then.
Crypto Winter proved to be rocky for Argo
Along with several miners, Argo Blockchain was forced to sell more than it mined in a month last summer when prices fell. As its shares took a beating, the previously announced plan to raise $27 million was cancelled. At the end of 2022, it suspended the listing of its shares on Nasdaq.
Argo even sold its Helios mining facility in Texas to Galaxy Digital for $65 million. The deal also requires Galaxy to also provide the mining company with a $35 million loan to avoid bankruptcy.
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