Bitcoin mining firm Hut 8 Corp. has filed a motion to dismiss a class-action lawsuit by shareholders, claiming it stems from a short seller’s attempt to manipulate its stock. The report claimed Hut 8 overpaid for acquiring US Bitcoin Corp. (USBTC) while concealing severe operational issues at a Texas facility.
In its Dec. 2 motion to a New York federal Court, Hut 8 accused J Capital Research of orchestrating a “short and distorted” campaign. The firm alleged the report was an attempt to drive its stock price down for the short-seller’s financial gain, harming ordinary shareholders.
“These ‘short and distort’ schemes are all too frequently followed by shareholder class actions that parrot the short seller’s negative views and label the report a ‘corrective’ disclosure.”
The lawsuit follows a January report from J Capital Research that accused Hut 8 of overstating the profitability of its USBTC acquisition and claimed Hut 8 concealed operational issues at a Texas facility. After publication, Hut 8’s stock dropped 23%, sparking multiple shareholder lawsuits.
Hut 8 Stock Surges Amid Lawsuit Allegations
Hut 8 countered the allegations by highlighting that its stock has recovered significantly. Since the report’s publication, the company’s stock has surged by approximately 300%. Hut 8 also emphasized that many public statements are protected under safe harbor provisions.
Additionally, Hut 8 stated concerns about USBTC’s limited operational history before the acquisition was disclosed. The company further argued that shareholders failed to show that any misrepresentations were made or that investors had been harmed. Hut 8’s stock has continued to rise, contradicting the lawsuit’s claims.
Hut 8 has requested the Court to dismiss the lawsuit “in its entirety, with prejudice,” asserting that the claims are based on a misguided attempt by short-sellers to manipulate the market. The firm also seeks other relief deemed appropriate by the Court.
VaaSBlock tweeted on December 4, 2024, that Hut 8 Corp had filed a motion to dismiss a class-action lawsuit from shareholders. The lawsuit claims Hut 8 exaggerated the profitability of its US Bitcoin Corp acquisition and hid operational issues from a short seller’s actions. Hut 8 denies the allegations, pointing to a 300% stock recovery since the report and safe harbor protections for forward-looking statements.
New Regulations for Bitcoin Miners in Texas
The Public Utilities Commission of Texas (PUCT) recently introduced new regulations for Bitcoin miners connected to the ERCOT grid. The rule mandates miners to register and disclose essential details, including facility locations, ownership, and electricity demand. Non-compliance could lead to hefty fines.
Miners must register with the state agency within one working day of connecting to the ERCOT grid and renew their registration annually by March 1. Bitcoin miners who fail to meet these requirements face significant penalties, with fines reaching up to $25,000 daily.
USBTC owned a 50% stake in a joint venture Bitcoin mining facility in Texas, which was acquired by Hut 8 through a merger in November 2023. Hut 8 argued that the lawsuit did not prove the misrepresentations were false when made or show that investors were harmed. It also claimed no direct connection between the allegations and the stock price drop.
The company stated that the shareholder complaint should be dismissed with prejudice and any other relief the Court deems appropriate. As per Google Finance data, Hut 8 (HUT) shares closed 3.6% lower on Dec. 3 at $25.06 but rose 0.6% in after-hours trading. The Bitcoin miner’s stock has surged nearly 99% this year and increased 296% since hitting a low of $6.33 in January.
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