A class-action lawsuit has been filed against Bitcoin mining company Bit Digital over fraud allegations. Investors in the mining company have filed the lawsuit in the Southern District Court of New York, who made stock purchases in the mining company between December 21, 2020, and January 8, 2021. Investors alleged that the mining company made false and misleading statements and failed to disclose the true extent of its mining operations. Fraud Allegations Over Misrepresentation of Chinese BTC Mining Operation The main allegations in the lawsuit include misrepresenting the scale of the company’s Chinese Bitcoin mining business. The court filing read: “Defendants’ (Bit Digital) positive statements about the Company’s business, operations, and prospects were materially misleading and/or lacked a reasonable basis.” The lawsuit is based on several allegations against Bit Digital by J Capital Research. The research company stated that it enquired with the Chinese governments and found out that the mining company does not have any Bitcoin mining infrastructure in the country. Even the companies from which Bit Digital said to have purchased the new miners have denied any dealings, saying: “The company reported at end Q3 2020 that it was operating 22,869 bitcoin miners in China, but that is simply a lie. With no subsidiary in China, that would be illegal and the machines subject to confiscation.” Bit Digital Officially Denies the Allegations Meanwhile, Bit Digital has officially denied all the allegations a day before the lawsuit was filed: “We have not signed leases for bitcoin mining facilities. In order to achieve lower utility costs, the mining facilities are maintained by our third-party suppliers.” Bit Digital must respond within a 60-day period. If the mining company fails to do so, it would bring about a default judgment for relief. Upon the lawsuit filing, the shares of the mining company (BTBT) have declined 2.15% and are currently down 45% year to date.
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