Accused Of Defrauding Investors With Fake Bitcoin Mining Business, Nasdaq-Listed Crypto Firm Was Sued
What about Bit Digital? What are they claiming against the lawsuit filed against it? Are they fraudulent as portrayed by others?
Against a Nasdaq-listed bitcoin mining company, a class-action lawsuit has been filed. Here they come to the state as the business is completely fraudulent it comes with nonexistent bitcoin mining operations was that the suit cites as a report.
‘Completely Fraudulent’ Is What Lawsuit Alleges Crypto Firm’s Bitcoin Mining Business
In the Southern District Court of New York against Bit Digital Inc., its CEO Min Hu and CFO Erke Huang was a class-action lawsuit filed on Wednesday.
Purporting to engage in bitcoin mining business through its US and Hong Kong subsidiaries was Bit Digital, a holding company listed on Nasdaq under the symbol BTBT. In September 2020 its name was changed from Golden Bull Ltd.
Alleging that Bit Digital operates a fake cryptocurrency business that is designed to steal funds from investors, the lawsuit cites a report by J Capital Research released on Jan 11.
It was then observed to be not possible where the J Capital alleges that Bit Digital’s claim as that it was operating 22,869 bitcoin miners in China is. Thereby they say no bitcoin miners are there just as the research firm then stated that it had also verified with local governments that are supposedly hosting the BTBT mining operation when adding the following
Completely fraudulent is what we think the bitcoin business BTBT discloses is.
Accusing the defendants of violating the federal securities laws is the plaintiff Anthony Pauwels individually as well as on behalf of all others purchasing Bit Digital securities between Dec 21, 2020, and Jan 8, 2021.
Failing to disclose material adverse facts about the company’s business, operations, and prospects as they said the defendants made materially false and/or misleading statements.
The lawsuit details that on unusually heavy trading volume following the publication of J Capital’s report was Bit Digital’s stock price fell $6.27 per share or 25% to close at $18.76 per share on Jan 11, 2021.
Local Chinese Authorities Never Heard of the Company
That their mining operations are in Wuhai, Zhundong, Xinlinhot, and Sichuan, China was Bit Digital previously declaring.
You have to register with the government to have a data centre and local governments thereby have records of all those data centres as well as bitcoin mining operations in China as J Capital explained. Without a Chinese registered entity that would not be legal as the research firm further noted. Before they can sign a lease or a hosting contract companies are required to show a registration document from a domestic legal entity moreover. Clearly claiming that it both operates and leases mining facilities in China was then the company.
J Capital contacted the governments of these regions to verify Bit Digital’s claims. J Capital then descried, they had no bitcoin mining operations and had not heard of Bit Digital as in telephone calls, local government officials of each locality told them.
None of these including big data, cryptocurrency, cloud computing parks, or data centres have registered here was what an official of Zhundong told J Capital. There’s no bitcoin centre here was what an official of Xilinhot also confirmed. There comes no bitcoin centre here and we have never heard of Bit Digital was an official of Wuhai telling J Capital.
Mining Rig Manufacturers Also ‘Drew a Blank’
J Capital said it spoke with all the major manufacturers in China of bitcoin mining equipment but none heard of BTBT when to verify that Bit Digital had the bitcoin miners it claims.
Telling J Capital that BTBT had not purchased equipment from them was an employee of Microbt a mining rig manufacturer from which BTBT said it bought 21,713 machines in 2020. He then said that he has never heard of Bit Digital. J Capital then clarified with no better result as they provided the name of the company’s former VIE.
In the first nine months of 2020 Bit Digital also said that it bought 256 miners from Bitmain. When inquired about BTBT however J Capital said that Bitmain drew a blank.
Bit Digital Claims False Accusations
Claiming that they are false Bit Digital Inc responded to the accusations on Tuesday. The company then claims they would not know of the company or its subsidiaries since they never purchased any brand-new miners from suppliers in 2020. It comes that 40,865 bitcoin miners were owned as Bit Digital then additionally affirmed it has disclosed in its third-quarter financial results just on Dec 18, 2020.
They have not then signed leases for bitcoin mining facilities whereas the mining facilities are maintained by their third-party suppliers in order to achieve lower utility costs and maintained by Hong Kong suppliers were the bitcoin mining facilities in China was what the company said additionally. Conducted by Xmax Hong Kong, all of the bitcoin mining operations in mainland China were furthermore Bit Digital explained that it acquired Xmax Hong Kong.
Compensatory damages, thereby reasonable costs and expenses incurred in this action against bitcoin including those counsel fees and expert fees, as well as such other and those further relief as the court, may deem just proper, the plaintiff and the class are seeking.