- Stronghold’s IPO statement omitted to flag potential difficulties obtaining miners, law firm alleges
- The mining company reported a fourth-quarter net loss of $17.5 million
A class action lawsuit against Stronghold Digital Mining is brewing after the company reported fourth quarter earnings results that fell short of expectations.
The company, which converts coal waste into energy to mine bitcoin, went public in October. Stronghold sold 7,690,400 shares of Class A common stock at a price of $19 per share as part of its initial public offering (IPO), receiving net proceeds of approximately $132.5 million.
Stronghold was set to use proceeds from the IPO for general purposes, including acquisitions of miners and power-generating assets to mine more bitcoin, according to an SEC فائلنگ.
But the IPO’s registration statement was “materially false and misleading,” according to a Friday statement by law firm Robbins Geller Rudman & Dowd LLP.
The law firm alleges that the statement did not mention that contracted suppliers were likely to miss anticipated delivery quantities and deadlines, and that Stronghold would experience difficulties obtaining miners outside of confirmed purchase orders.
If included, such information may have alerted investors of the “significant risk” that Stronghold would not expand its mining capacity as expected and likely experience losses, the firm argued in the statement.
A Stronghold spokesperson did not immediately return Blockworks’ request for comment.
Stronghold’s 2021 fourth-quarter adjusted earnings-per-share showed a loss of $0.52 a share, the company گزشتہ مہینے کی اطلاع دی گئی. It posted a fourth quarter net loss of $17.5 million.
CEO Gregory Beard said during the firm’s latest earnings call that the results are “not representative of the potential we aim to deliver.”
Stronghold executives attributed the losses to delivery delays, noting that it received roughly 3,300 of the total 15,000 miners ordered from Canada-based MinerVa Semiconductor Corp, despite a delivery deadline of Dec. 31, 2021.
The stock price fell roughly 32% following the earnings report, according to Robbins Geller Rudman & Dowd.
Anybody who bought Stronghold’s stock in connection with the IPO may seek to become the lead plaintiff, who will act on behalf of all other class members of the suit. Lead plaintiff motions must be filed with the court by June 13.
The class action lawsuit against Stronghold, which commenced Thursday, charges the company and some of its top executives, as well as the IPO’s underwriters.
ہر شام اپنے ان باکس میں دن کی سرفہرست کرپٹو خبریں اور بصیرتیں حاصل کریں۔ بلاک ورکس کے مفت نیوز لیٹر کو سبسکرائب کریں۔ اب.
پیغام سٹرنگ ہولڈ کان کنی کو کمائی پر مقدمہ کا سامنا کرنا پڑتا ہے۔ پہلے شائع بلاک ورکس.
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