Bitcoin mining firm Hut 8 Corp. has filed a motion in a New York federal court to dismiss a class-action lawsuit brought by shareholders.
The lawsuit alleges that the company misled investors about its acquisition of US Bitcoin Corp. (USBTC), a firm reportedly plagued by operational issues.
Hut 8, however, claims the legal action stems from a short-seller campaign aimed at devaluing its stock for financial gain.
Hut 8 Accuses J Capital Research of Orchestrating the Scheme
In its Dec. 2 filing, Hut 8 accused J Capital Research, a short-selling firm, of orchestrating what it called a “short-and-distort” scheme.
The company argued that J Capital’s January report, which alleged Hut 8 had overpaid for USBTC and concealed critical issues at a Texas mining facility, triggered a sharp decline in its stock value.
Hut 8’s shares dropped 23% following the report, prompting multiple lawsuits in March from investors seeking compensation for their losses.
Hut 8 asserts that the report misrepresented facts and contends that its stock has since rebounded, gaining approximately 300% from its January lows.
The firm highlighted that it had disclosed USBTC’s limited operating history and noted that many of its forward-looking statements were protected under legal “safe harbor provisions.”
The merger with USBTC, completed in November 2023, included a 50% interest in a Bitcoin mining facility in Texas.
The @Hut8Corp has filed a motion to dismiss a class-action lawsuit from shareholders, alleging it stems from a short seller's attempt to profit at the expense of ordinary investors. The lawsuit claims the firm overstated the profitability of its acquisition of US Bitcoin Corp and… pic.twitter.com/xR9We5KKIS
— VaaSBlock (@vaasblock) December 4, 2024
Despite the lawsuit’s claims, Hut 8 argued that shareholders have not demonstrated that the alleged misrepresentations were false when made or that they caused tangible harm to investors.
The company maintained that the stock price’s recovery undermines the basis of the lawsuit.
“These short-and-distort cases are regularly dismissed,” Hut 8 stated in its motion, urging the court to reject the shareholder complaint.
It called for the case to be dismissed “in its entirety, with prejudice,” and requested additional relief as deemed appropriate by the court.
Hut 8’s stock has shown remarkable resilience this year, climbing nearly 99% and trading at $25.06 as of Dec. 3.
After-hours trading reflected a modest 0.5% uptick. Since hitting a low of $6.33 in January, the stock has gained an impressive 296%, according to Google Finance.
Bitcoin Miners in Texas Required to Register
Last month, the Public Utilities Commission of Texas (PUCT) implemented a new regulation requiring Bitcoin miners connected to the Energy Reliability Council of Texas (ERCOT) grid to register and provide critical information about their operations.
The rule mandates miners to disclose their facilities’ locations, ownership details, and electricity demand to the state agency.
Under the regulation, Bitcoin miners must register within one working day of connecting to the ERCOT grid.
The registration must also be renewed annually by March 1.
Bitcoin miners failing to comply with the new requirements could face severe penalties.
Violators will be charged with a Class A violation, carrying fines of up to $25,000 per day.
In another development, the Securities and Exchange Commission (SEC) has filed a lawsuit against investment firm Touzi Capital, accusing it of defrauding investors and misrepresenting the liquidity and profitability of its crypto asset mining fund.
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