NY law firm investigates potential 'securities fraud' at Core Scientific
A New York-based law firm says it has begun an investigation into whether Bitcoin miner Core Scientific and its leadership potentially engaged in “securities fraud and other unlawful business practices" which led to its stock price falling on several occasions.
According to securities class action firm Pomerantz LLP, the investigation was prompted by a report from Culper Research in 2022, which alleged that Core Scientific had "wildly oversold" its mining and hosting businesses in 2021 and also waived a 180-day lockup period of over 282 million shares, making them "free to be dumped" in Mar. 2022.
This report suggested that insiders at Core Scientific had "abandoned any pretense of care for minority shareholders," noting that on this news, Core Scientific's share price fell 9.4% on Mar. 3, 2022.
The law firm also highlighted another incident on Sept. 28, 2022, in which crypto lender Celsius Network filed a motion in the bankruptcy court, accusing Core Scientific of violating the automatic stay provisions, adding improper surcharges, and failing to meet its contractual obligations.
This led to its stock price falling 10.3% the day after on Sep. 29, 2022, it said.
In a final incident, the law firm said on Oct. 27, 2022, Core Scientific announced that "given the uncertainty regarding the Company's financial condition, substantial doubt exists about the Company's ability to continue," revealing it held only 24 Bitcoin (BTC) compared to 1,051 BTC on Sept. 30.
This news caused Core Scientific's stock price to drop sharply, closing at $0.22 per share, a decline of 78.1%, said the firm.
Pomerantz LLP said it was investigating these claims on behalf of investors of Core Scientific and has called for any such investors to join the
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