CoinDesk Analysis Team
CoinDesk
Argo Blockchain, a crypto miner whose shares trade on the London Stock Exchange (ARB) and Nasdaq (ARBK), is facing a class action lawsuit over alleged misleading statements made during the initial public offering (IPO) of its American depositary shares (ADS) in 2021.
The London-based company made untrue or incomplete statements, omitting "to state other facts necessary to make the statements made not misleading," according to a filing dated Jan. 26 in the U.S. District Court for the Eastern District of New York.
Argo is accused of failing to disclose that it suffered from significant capital constraints, electricity and network difficulties. These constraints hampered the firm's ability to mine Bitcoin and operate its Helios facility in Texas.
"Argo’s business was less sustainable than Defendants had led investors to believe; accordingly, Argo’s business and financial prospects were overstated," according to the filing.
The mining firm offered 7.5 million ADS, each representing 10 shares of common stock, on the Nasdaq Global Market in September, 2021. However, 2022 was not kind to Argo, nor to its peers in the bitcoin mining industry. Firms were squeezed between falling crypto valuations and rising electricity costs. The pressures culminated in bankruptcy for one of the industry's biggest miners, Core Scientific.
Argo narrowly avoided the same fate by selling the Helios facility to Mike Novogratz’s crypto-focused financial-services firm Galaxy Digital for $65 million and a $35 million loan.
The sale helped lift Argo's shares, which slumped more than 90% last year. The London-based stock has more than doubled in January and the U.S. shares, which were at risk of being suspended, have also recovered.
Argo's LSE-listed shares are down over 3% at 15.94 pence as of midday in London. At the time of writing, ARBK shares on Nasdaq are down about 4% at $1.95 in pre-market trading.
Argo had not responded to CoinDesk's request for comment at press time.
All writers’ opinions are their own and do not constitute financial advice in any way whatsoever. Nothing published by CoinDesk constitutes an investment recommendation, nor should any data or Content published by CoinDesk be relied upon for any investment activities. CoinDesk strongly recommends that you perform your own independent research and/or speak with a qualified investment professional before making any financial decisions.
Recommended Content
Editors’ Picks
TRON gains 10% in 2024, supply of stablecoins reaches over $50 billion in Q1
TRON, a blockchain-based digital platform, has seen positive growth in the first quarter of 2024, as seen in a Messari report. TRON noted gains across several metrics like market capitalization, revenue and total value locked.
XRP hovers near $0.50 as Ripple CTO addresses concerns related to stablecoin launch
XRP is hovering near $0.53 on Friday, spending nearly all week below $0.55. Ripple CTO David Schwartz addressed concerns on stablecoin and XRP utility on Thursday.
Terraform Labs set to restrict access for users in the US after recent ruling in SEC lawsuit
Blockchain company Terraform Labs said Thursday that it will restrict access to some of its products and services for US-based users as it expects to receive a court order soon in light of its legal battle against the US Securities and Exchange Commission (SEC).
Bitcoin Weekly Forecast: BTC’s next breakout could propel it to $80,000 Premium
Bitcoin’s (BTC) recent price consolidation could be nearing its end as technical indicators and on-chain metrics suggest a potential upward breakout. However, this move would not be straightforward and could punish impatient investors.
Bitcoin: BTC’s next breakout could propel it to $80,000 Premium
Bitcoin’s (BTC) recent price consolidation could be nearing its end as technical indicators and on-chain metrics suggest a potential upward breakout. However, this move would not be straightforward and could punish impatient investors.