Bitcoin Miner Argo Blockchain Faces Class Action Suit Over U.S. Share Sale
Argo Blockchain, a crypto miner whose shares trade on the London Stock Exchange (ARB) and Nasdaq (ARBK), is facing a class action lawsuit over alleged misleading statements made during the initial public offering (IPO) of its American depositary shares (ADS) in 2021.
The London-based company made untrue or incomplete statements, omitting "to state other facts necessary to make the statements made not misleading," according to a filing dated Jan. 26 in the U.S. District Court for the Eastern District of New York.
Argo is accused of failing to disclose that it suffered from significant capital constraints, electricity and network difficulties. These constraints hampered the firm's ability to mine bitcoin and operate its Helios facility in Texas.
"Argo’s business was less sustainable than Defendants had led investors to believe; accordingly, Argo’s business and financial prospects were overstated," according to the filing.
The mining firm offered 7.5 million ADS, each representing 10 shares of common stock, on the Nasdaq Global Market in September, 2021. However, 2022 was not kind to Argo, nor to its peers in the bitcoin mining industry. Firms were squeezed between falling crypto valuations and rising electricity costs. The pressures culminated in bankruptcy for one of the industry's biggest miners, Core Scientific.
Argo narrowly avoided the same fate by selling the Helios facility to Mike Novogratz’s crypto-focused financial-services firm Galaxy Digital for $65 million and a $35 million loan.
The sale helped lift Argo's shares, which slumped more than 90% last year. The London-based stock has more than doubled in January and the U.S. shares, which were at risk of being suspended, have also recovered.
Argo's LSE-listed shares are down over 3% at 15.94 pence as of midday in London. At the time of writing, ARBK shares on Nasdaq are down about 4% at $1.95 in pre-market trading.
Argo had not responded to CoinDesk's request for comment at press time.
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