The crypto currency mining business Argo Blockchain, which is based in the United Kingdom, has been brought into court by its investors in the form of a freshly filed Class Action complaint.
In the case, the investors alleged that Argo Blockchain had deceived them by concealing relevant information concerning potential circumstances that may affect the company's capacity to carry out its operations.
Specifically, the investors complained that Argo Blockchain did not address the implications of limited financial resources, high power prices, and challenging network conditions.
According to the text of the case, "The Offering Documents were carelessly written and, as a result, included false assertions of a material fact or omitted to mention additional facts essential to making the claims made not misleading." In other words, the statements were misleading.
Argo Blockchain was caught up in the misfortunes that befell the larger digital currency ecosystem, which specifically affected Bitcoin miners as the ongoing conflict in Ukraine bolstered an energy crisis that usually enhanced the expenses of operations and maintenance mining areas.
These misfortunes befell the ecosystem because the conflict in Ukraine fueled an energy crisis, which increased the costs of operating mining facilities.
Following the steep declines in value seen by crypto currencies such as Bitcoin over the last year, Argo Blockchain found itself amid a liquidity crunch of its own.
The investors stated that Argo Blockchain's business was not sustainable due to the outlook in the sector and how the company responded to the events. Still, the company did not reveal this information while it was seeking funds from the general public to finance its operations.
According to the lawsuit, "Had [the investors] Known the Reality, they wouldn't have purchased nor Otherwise Bought Said Securities" at the high prices that were given, or they wouldn't have done so at all.
n addition to being listed on the London Stock Exchange, the company applied for an IPO with SEC) in September 2021. The company sold 7.5 million shares of its stock for $15 each during this offering.
After signing a 3.57% gain on the Nasdaq market after trading on Thursday, the shares had plunged to $2.03 by the time trading had finished for the day on Friday.
Troubles of Mining Companies
Because of the intense financial pressure that Argo Blockchain was under, the firm was forced to list and sell its flagship Bitcoin mining facility, Helios, in the state of Texas. Galaxy Digital Holdings Ltd (TSE: GLXY), one of the most prominent companies in the business and a long-term partner of Argo Blockchain, purchased the facility for $65 million.
A significant number of miners were forced into bankruptcy as a direct result of the strain on liquidity experienced across the entire mining ecosystem.
Many of these miners were unable to pay their ongoing expenses as well as their outstanding debt amounts. Core Scientific Inc. was one of the most prominent businesses that followed in this direction.
The bankruptcy petition for the firm was submitted back in December of the previous year. After selling more than 7200 individual Bitcoin units a few months earlier to meet its operational expenditures, the company decided to go with this alternative. One of the problems the company has been having may be traced back to the fact that other companies, such as Celsius Network, have not paid the hosting fees they owe.
Other miners, such as Riot Platforms Inc & Iris Energy Limited, are also struggling to make ends meet amid their own financial crises, in addition to Argo Blockchain and Core Scientific.