A class action lawsuit has been filed in the Southern District of New York against mining company Bit Digital, which is listed on the Nasdaq exchange. Investors accuse the company of fraud.
The lawsuit was sent to the Court of the Southern District of New York on behalf of private investor Anthony Pauwels. The plaintiff is seeking damages for Bit Digital investors who bought shares in this company from December 21, 2020 to January 8, 2021.
According to the lawsuit, the mining company provided information misleading investors. Bit Digital stated that it has 22,869 Bitcoin mining devices in China. However, referring to a report from J Capital, the plaintiff argues that this cannot be true.
Analysts at J Capital contacted the Chinese authorities to verify the information about Bit Digital, and concluded that holding such a huge number of mining devices is “simply impossible”. According to them, Bit Digital is engaged in cryptocurrency fraud with the aim of appropriating investors’ money.
Bit Digital has denied all allegations, saying that its mining operations in China are run by XMAX Hong Kong, which handles all matters of expenses and utility bills.
If Bit Digital does not appeal the claim within 60 days, the court will default to awarding damages. Bit Digital (BTBT) shares fell 2.15% amid litigation with investors.
Recall that last year, investors filed a lawsuit against the Chinese manufacturer of mining equipment Canaan Creative, accusing him of providing false information about his financial situation.