Bitcoin Miner Argo Blockchain Faces Class-Action Suit Over US Share Sale

Argo failed to disclose that it suffered from significant capital constraints as well as electricity and network difficulties, the suit says.

AccessTimeIconJan 27, 2023 at 12:27 p.m. UTC
Updated May 9, 2023 at 4:06 a.m. UTC
10 Years of Decentralizing the Future
May 29-31, 2024 - Austin, TexasThe biggest and most established global hub for everything crypto, blockchain and Web3.Register Now

Argo Blockchain, a crypto miner whose shares trade on the London Stock Exchange (ARB) and Nasdaq (ARBK), is facing a class-action lawsuit over alleged misleading statements made during the initial public offering (IPO) of its American depositary shares (ADS) in 2021.

The London-based company made untrue or incomplete statements, failing "to state other facts necessary to make the statements made not misleading," according to a filing dated Jan. 26 in the U.S. District Court for the Eastern District of New York.

Argo is accused of failing to disclose that it suffered from significant capital constraints, as well as electricity and network difficulties. These constraints hampered the firm's ability to mine bitcoin and operate its Helios facility in Texas. Although the complaint was filed as class action, it doesn't actually become one until a judge assigns it that status.

"Argo’s business was less sustainable than Defendants had led investors to believe; accordingly, Argo’s business and financial prospects were overstated," according to the filing. The mining firm offered 7.5 million ADS, each representing 10 shares of common stock, on the Nasdaq Global Market in September, 2021. However, 2022 was not kind to Argo, nor to its peers in the bitcoin mining industry. Firms were squeezed between falling crypto valuations and rising electricity costs. The pressures culminated in bankruptcy for one of the industry's biggest miners, Core Scientific.

Argo narrowly avoided the same fate by selling the Helios facility to Mike Novogratz’s crypto-focused financial-services firm Galaxy Digital for $65 million and a $35 million loan.

The sale helped lift Argo's shares, which slumped more than 90% last year. The London-based stock has more than doubled in January, and the U.S. shares, which were at risk of being suspended, have also recovered.

Argo's LSE-listed shares are down over 3% at 15.94 pence as of midday in London. At the time of writing, ARBK shares on Nasdaq are down about 4% at $1.95 in pre-market trading.

Argo had not responded to CoinDesk's request for comment at press time.

UPDATE (Jan. 27, 15:20 UTC): Adds that the suit needs to be certified by a judge before it becomes an official class action.

Disclosure

Please note that our privacy policy, terms of use, cookies, and do not sell my personal information has been updated.

CoinDesk is an award-winning media outlet that covers the cryptocurrency industry. Its journalists abide by a strict set of editorial policies. In November 2023, CoinDesk was acquired by the Bullish group, owner of Bullish, a regulated, digital assets exchange. The Bullish group is majority-owned by Block.one; both companies have interests in a variety of blockchain and digital asset businesses and significant holdings of digital assets, including bitcoin. CoinDesk operates as an independent subsidiary with an editorial committee to protect journalistic independence. CoinDesk employees, including journalists, may receive options in the Bullish group as part of their compensation.

Jamie Crawley

Jamie Crawley is a CoinDesk news reporter based in London.


Learn more about Consensus 2024, CoinDesk's longest-running and most influential event that brings together all sides of crypto, blockchain and Web3. Head to consensus.coindesk.com to register and buy your pass now.