- An investor sued Argo Blockchain for publishing inaccurate statements during its initial public offering.
- Argo reportedly failed to disclose its vulnerability to several factors.
- Argo filed IPO documents with the Securities and Exchanges Commission (SEC) in late 2021.
- Cryptocurrency mining suffered dire consequences in 2022 due to the market downturn.
On Thursday, an investor of crypto miner Argo blockchain instituted a lawsuit against the firm and its executives. According to the filing, Argo allegedly published inaccurate statements during its initial public offering (IPO) in 2021 and omitted vital information to deceive investors.
"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," the filing read.
The investor, identified as Aaron Murphy, claiming to represent everyone who bought the stock from September 2021 through October 2022, accused Argo and its board members of failing to disclose its vulnerability to capital constraints, electricity costs, and network issues.
Notably, the plaintiff in the lawsuit alleged investors were misled to believe those factors had little or no impact on the survival of the firm. Now, Murphy said he later realized that the business was “less sustainable” as against the earlier statement issued by the firm, which overstated its financial prospects.
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Through the filing, Murphy complained about the prevailing financial crisis with Argo, stressing that he would not have purchased or acquired its securities if they knew the truth.
Argo Made $105 Million Through its IPO
In late 2021, the crypto miner filed a report with the United States Securities and Exchange Commission (SEC) regarding its IPO. Following this development, Argo decided to issue about 7.5 million shares to the public. According to reports, it offered the shares at a price of $15 and made gains worth $105 million from the sales.
In 2022, the bear market, which ravaged the crypto sphere, had dire consequences on the mining sector. The period was marked by unprecedented rises in electricity prices, a fall in cryptocurrency prices, and stringent regulations. Due to this development, the Argo share price fell sharply, trading at $0.3 per share in late 2022.
On the Flipside
- Last month, Nasdaq informed Argo that its shares had been below $1 for 30 consecutive days, thus preventing its listing on the exchange.Amid indications of market recovery early this month, the firm’s share recovered to $1.96. A few days ago, it received a notification from Nasdaq that it had met the required closing bid price of $1 for ten consecutive trading days.
Why You Should Care
Argo got a lifeline from a potential bankruptcy after it signed a deal with Galaxy Digital a few weeks ago. However, in light of current developments, it appears that the firm has yet to overcome its tough times.
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