Argo Blockchain Dragged to Court in Class Action Lawsuit Filed by Its Investors

UTC by Godfrey Benjamin · 3 min read
Argo Blockchain Dragged to Court in Class Action Lawsuit Filed by Its Investors
Photo: Depositphotos

In the heat of the financial strain that Argo Blockchain was plunged into, the company had to put up and sold its flagship Bitcoin mining facility Helios in Texas.

Argo Blockchain Plc (NASDAQ: ARBK), a British cryptocurrency mining company, has been dragged to court via a newly filed Class Action lawsuit by its own investors. According to the lawsuit, the investors claimed that Argo Blockchain mislead them by refusing to provide full disclosures about factors that could impact its operational capabilities.

Specifically, the investors said Argo Blockchain was silent about the impacts of capital constraints, electricity costs, and network difficulties.

“The Offering Documents were negligently prepared and, as a result, contained untrue statements of material fact or omitted to state other facts necessary to make the statements made not misleading,” the lawsuit read.

Argo Blockchain was caught up in the mishaps that befell the broader digital currency ecosystem which specifically affected Bitcoin miners as the ongoing war in Ukraine fueled an energy crisis that generally increased the costs of operating mining facilities. Argo Blockchain was also caught up in a liquidity strain following the prices of Bitcoin and other cryptocurrencies that plunged over the course of the past year.

With the outlook in the industry and how Argo Blockchain responded to the events, the investors claimed the company’s business was not sustainable, and the firm did not present this fact when soliciting funds from the public.

“Had [the investors] known the truth, they would not have purchased or otherwise acquired said securities, or would not have purchased or otherwise acquired them at the inflated prices that were paid,” the complaint reads.

While the company is listed on the London Stock Exchange, it also filed for an Initial Public Offering (IPO) with the United States Securities and Exchange Commission (SEC) back in September 2021 where it offered 7.5 million shares at a price of $15. Since that time, the shares had dropped to $2.03, after inking a 3.57% growth on the Nasdaq exchange at the close of trading on Thursday.

Argo Blockchain and Broader Mining Woes

In the heat of the financial strain that Argo Blockchain was plunged into, the company had to put up and sold its flagship Bitcoin mining facility Helios in Texas. The facility was sold for $65 million to Galaxy Digital Holdings Ltd (TSE: GLXY), one of the top industry giants and long-term partners of Argo Blockchain.

The liquidity strain the broader mining ecosystem experienced notably pushed a lot of miners into bankruptcy as many were unable to service their recurrent expenditure as well as outstanding debt figures. One of the major companies that trailed this path was Core Scientific Inc (OTCMKTS: CORZQ).

The company filed for bankruptcy back in December last year according to an earlier report by Coinspeaker. The firm chose this option after selling off more than 7200 units of Bitcoin to cover its operational costs a few months earlier. The company attributed the failure of firms like Celsius Network to pay up their hosting charges as one of the reasons for its woes.

Besides Argo Blockchain and Core Scientific, other miners including Riot Platforms Inc (NASDAQ: RIOT) and Iris Energy Limited (NASDAQ: IREN) amongst others are also battling their own financial crisis.

Blockchain News, Cryptocurrency News, News
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