Argo Blockchain, a crypto miner with shares traded on the London Stock Exchange (LSE) and the Nasdaq (NASDAQ), is facing a class-action lawsuit for allegedly making fraudulent representations during the Initial Public Offering (IPO) of its American Depositary Shares (ADS) in 2021.
Argo Blockchain IPO Lawsuit
On September 23, 2021, the Texas-based Bitcoin mining company Argo went public after submitting the necessary paperwork to the US Securities and Exchange Commission (SEC). During their initial public offering (IPO), Argo raised approximately $105 million by selling 7.5 million ADS shares for $15 each.
On January 26th, an early Argo Blockchain investor filed a complaint, alleging that the crypto miner had provided misleading information during its IPO registration. Investors in Argo claimed that the cryptocurrency miner had made deceptive claims and omitted crucial facts during its IPO filing.
According to the lawsuit, the miner allegedly made false or misleading statements and failed to disclose its significant capital limitations, electricity prices, and network challenges.
The lawsuit claimed that Argo’s company was less stable than the defendants had led investors to believe, resulting in an overstatement of Argo’s business and financial prospects. Additionally, investors asserted that they would not have bought or acquired the assets at the high price paid if Argo Blockchain had not concealed such critical data.
Argo’s Troubled Mining Operations
Argo Blockchain, a British bitcoin miner, is one of several publicly-listed cryptocurrency mining companies struggling to survive amid a decline in the price of Bitcoin and rising energy prices.
The company manages mining operations across North America and had hoped to build an 800-megawatt mining farm in Dickens County, Texas last year. However, in October, the company encountered financial difficulties, stating that it would need to curtail or suspend activities if it did not receive new financing.
Moreover, Argo has had to make several challenging moves to survive the bear market. The company was unable to operate its Texas Helios facility or mine Bitcoin due to continuous sanctions. As a result, the company decided to sell the facility to Galaxy Digital in order to boost its liquidity.
On December 28, 2022, it was announced that Helios, the company’s main mining facility, would be sold to digital asset investment management Galaxy Digital for $65 million.
ARGO Soars As It Gets Relisted On The NASDAQ
The mining company issued 7.5 million ADS on the Nasdaq Global Market in September 2021, each of which represented 10 shares of common stock. However, Argo struggled in 2022, as the company was caught between falling crypto prices and rising electricity costs. ARBK was delisted by NASDAQ due to its consistently poor performance. The Nasdaq Stock Market requires that a company maintain a minimum closing bid price of $1 for ten consecutive trading days.
Due to the rise in BTC, which caused the bid price to remain above $1 for ten consecutive days, NASDAQ relisted ARBK on January 23. Furthermore, the lawsuit comes just days after Argo reclaimed its NASDAQ listing compliance.
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