Hut 8 stock crash attracts many lawsuits

Several law firms have recently filed to represent Hat 8 investors who suffered losses in a short-selling lawsuit against Nasdaq.

On January 19, Bitcoin (BTC) mining company Hut 8's share price dropped 23% – from $7.12 to $2.16 – insiders were preparing to dump Hut 8 shares after the publication of an unconfirmed J Capital report. Hut 8 reviewed the report and on January 24, denied all allegations of short selling. The company said:

“The report appears to represent a deliberate attempt to spread false information about Hut 8, its operations, finances, management practices and chief executives. The statements made by the short seller reveal an inadequate, distorted understanding of the company, its operations, and its executives.

A J Capital report accused Hut 8's partner USBTC of having legal trouble over its $725 million merger deal history. Jaime Leverton stepped down as Hat 8's CEO and was subsequently replaced by Asher Jeannott, president and member of the company's board of directors.

Investors who bought Hut 8 shares between November 9, 2023 and January 18, 2024 have been urged to join their efforts to ensure timely settlement of their losses. Hut 8 shareholders who have suffered losses within the time limit and wish to serve as lead plaintiffs are asked to contact their preferred law firm by April 8, 2024.

According to one of the law firms, Kuznicki Law, Hat 8 and its executives violated federal securities laws by defaulting on certain finances, which ultimately negatively affected the stock price.

Some of the lawsuits involve individuals who suffered losses, while others claim that all shareholders who purchased shares during the period are entitled to compensation. Additionally, a contingency fee arrangement ensures that participating shareholders are not liable for court fees.

Related: Hut 8 begins construction on 63MW crypto mining site in Texas

On March 6, Hut 8 announced the closure of its mining site in Drumheller, Alberta, Canada, citing power outages and surges.

“After a comprehensive analysis, we determined that Drumheller's profitability was significantly impacted by a number of factors, including higher energy costs and voltage issues,” newly appointed CEO Gennot said in a statement.

Magazine: Is Measuring Blockchain Transactions Per Second (TPS) Foolish in 2024? Big questions