Investors in crypto mining firm Argo Blockchain have filed a class action lawsuit accusing the miner of misrepresenting and omitting key information during its initial public offering (IPO) in 2021.
A newly filed Jan. 26 lawsuit targets Argo and several of its executives and board members. She claims that the company failed disclose how sensitive it was to capital constraints, electricity costs, and network difficulties.
“The offering documents were negligently prepared and, as a result, contained misrepresentations of material facts or failed to state other facts necessary to ensure that the statements made were not misleading,” the lawsuit states.
As a result, investors claim the company was “less sustainable” than they had believed, leading to an overstatement of the miner’s financial prospects. The complaint noted:
“If (the investors) had known the truth, they would not have purchased or otherwise acquired said securities, or 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) regarding its IPO.
7.5 million shares were issued to the public on the same date at an offering price of $15, generating proceeds of $105 million before expenses.
Since then, the miner’s share price has taken a hit and is currently trading at $1.96 per share after dropping as low as $0.36.
Cointelegraph requested a comment from Argo but did not immediately receive a response.
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The recent lawsuit comes just days after Argo regained compliance with Nasdaq’s listing rule on Jan. 23, which requires a company to maintain a minimum closing bid price of $1 for 10 consecutive trading days.
Argo had to make tough decisions to overcome the ongoing bear market and difficult conditions faced by crypto miners. It announced on December 28 that it would sell its flagship mining facility, Helios, to digital asset investment manager Galaxy Digital for $65 million.
Crypto miners in general have had a torrid year in 2022 – with high electricity prices, falling crypto prices and increased mining difficulties eat into their bottom line.