Back on The Nasdaq But New Lawsuit Hits

A class-action lawsuit for misleading statements and lack of key information was brought by investors against Argo Blockchain, a crypto mining firm recently delisted from the Nasdaq.

Investors of Argo Blockchain have sued the firm for making false and misleading statements and conspicuously withholding crucial information during its initial public offering (IPO) in 2021.

The class-action lawsuit was brought against Argo’s executives and board members.

“The offering documents were negligently prepared and, as a result, contained untrue statements of material fact or omitted to state other facts necessary to make the statements made not misleading,” as written in the filing.

Difficult Situation

The plaintiff argued that investors would have not acquired the company’s securities if they had learnt the truth.

On Sep. 22, 2021, Argo announced certain information about its initial public offering. According to the press release, the firm sold 7.5 million shares on the IPO date at $15, making a gross proceeds of $112,500,000.

The share price has since been on a steady decline. The price dropped below $0.38 in December 2022 and rebounded above $1.

By the end of 2022, Argo suspended trading on Nasdaq after receiving warning from the stock exchange.

Nasdaq issued a notice on Dec. 16, warning that Argo might be removed from Nasdaq if the company’s share price failed to return above $1. Keeping a share at $1 is part of minimum listing requirements on Nasdaq’s Global Market.

Argo’s share price fell below $1, leading to the temporary suspension of trading in December.

But Argo seemed to have a lucky start as its price recovered in January. Consequently, Argo’s trading on Nasdaq resumed on Jan. 23.

Macro is Rough

Market downturn and global economic hardships have challenged not only crypto traders and investors but also crypto miners.

One of the prominent names in the sector, Core Scientific, filed for chapter 11 bankruptcy in December 2022. Meanwhile, Argo Blockchain was on the brink of insolvency under financial pressure.

To survive the bear, the crypto miner eventually sealed a $65 million acquisition deal with investment management firm Galaxy Digital.

As part of the agreement, Galaxy Digital acquired Argo’s former flagship mining facility, Helios. Additionally, Galaxy also lent $35 million to Argo to help the firm clear part of its debts.

Since the middle of 2022, the price of bitcoin has been on a downward trend, which, when paired with increasing electricity prices, rising interest rates, and an uncertain outlook for the global economy, has driven many miners to stop mining.

Because of their high levels of debt, large corporations including Core Scientific, Argo Blockchain, and Iris Energy have gone perilously close to declaring bankruptcy.

Analysts and industry executives have raised concerns about the long-term viability of mining, particularly in light of the fact that the values of the most prominent cryptocurrencies have been extremely volatile since June.

After reaching a peak of nearly $70,000 around the end of last year, the price of bitcoin has been hovering around the $21,000 mark for the majority of this year.

Fighting to Survive

Companies like Bitdeer Technologies bought more miners even as the major players were selling them to stay in business. According to reports, the company established a vehicle with a capitalization of $250 million to purchase and operate miners.

A rise in difficulty can be considered as a positive indication, but miners have to take a number of factors into consideration in light of the gloomy state of the world economy.

If the price of bitcoin maintains as it is currently, miners should expect to see a decline in the amount of money they make from their efforts over the long run. This is because there will be a limited quantity of bitcoin and increased levels of competition.

Following a prolonged period of fall, the price of bitcoin started to rally at the beginning of 2023. This definitely had a favorable impact on the entire market, as seen by the considerable increase in the value of the shares held by many miners.

At the time of this writing, the price of bitcoin has reached $23,000.