New York law firm investigates potential ‘securities fraud’ at Core Scientific

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A New York-based law firm said it has launched an investigation into whether Bitcoin miner Core Scientific and its executives were potentially involved in securities fraud and other illegal business practices, “resulting in the fall in its share price several times.

According to securities class action firm Pomerantz LLP, the investigation was prompted by a Culper Research report in 2022, which alleged that Core Scientific “grossly oversold” its mining and hosting businesses in 2021 and also had waived a blocking period of more than 180 days. 282 million shares, making them “free to throw” in March 2022.

This report suggested that Core Scientific insiders had “abandoned any pretense of caring about minority shareholders”, noting that on this news, Core Scientific’s share price fell 9.4% on March 3, 2022.

The law firm also pointed to another incident on September 28, 2022, in which crypto lender Celsius Network filed a petition in bankruptcy court accusing Core Scientific of violating automatic stay provisions, to add inappropriate surcharges and not to respect its contractual obligations.

This led its share price to fall 10.3% the day after September 29, 2022, he said.

In a final incident, the law firm said on October 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 that she only held 24 Bitcoin (BTC) compared to 1,051 BTC on September 30.

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The news caused Core Scientific’s stock price to drop sharply, closing at $0.22 per share, a drop of 78.1%, the company said.

Pomerantz LLP said it is investigating these claims on behalf of Core Scientific investors and called on those investors to join the potential class action lawsuit.

The same law firm filed a class action lawsuit against Silvergate Capital on December 13 for making “materially false and/or misleading statements” and failing to disclose “material adverse facts regarding the business, operations and prospects of the company”.

Related: BTC Miner Core Scientific Gets Tentative Green Light for $37.4M Bankruptcy Loan

On January 4, Cointelegraph reported that Core Scientific had agreed to shut down 37,000 mining rigs it hosted for Celsius due to failure to pay its electricity bills by bankrupt cryptocurrency lenders. According to the bitcoin miner, this played a significant role in the liquidity issues that led to its filing for Chapter 11 bankruptcy on December 21.

On Dec. 23, Cointelegraph reported that a United States bankruptcy court had granted Core Scientific interim approval to access a $37.5 million loan from existing creditors to fund its liquidity issues.

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