Hut 8 Files Motion to Dismiss Shareholder Lawsuit
Bitcoin mining company Hut 8 Corp. has filed a motion in a New York federal court to dismiss a class-action lawsuit filed by its shareholders. The lawsuit stems from claims made in a report by short-seller J Capital Research, which accused Hut 8 of overpaying for a company with operational challenges. Hut 8 argues that the report was part of a “calculated effort” to devalue its stock for financial gain.
Short-Seller’s Tactics Lead to Shareholder Lawsuit
In its December 2 submission, Hut 8 called the lawsuit part of a “short-and-distort” strategy by J Capital Research, claiming that such tactics frequently result in lawsuits that amplify the short-seller’s narrative. The company pointed out that these cases are often dismissed, and it urged the court to take similar action in this instance.
J Capital Research’s Allegations Against Hut 8
The class-action lawsuit originated from allegations made by J Capital Research in January, which claimed that Hut 8 misrepresented the profitability of its acquisition of US Bitcoin Corp. (USBTC), concealed operational flaws at a Texas facility, and possibly withheld information about ownership stakes. After the publication of this report, Hut 8’s stock dropped by 23%.
Stock Price Recovery and Safe Harbor Provisions
Hut 8 has since seen a significant recovery, with its stock price rising by 300% since the release of the report. The company also argued that many of its public statements were protected by “safe harbor provisions” and that USBTC’s operational risks had already been disclosed. Hut 8 denies any false statements or harm to shareholders from the claims.
Hut 8 Requests Dismissal of Lawsuit
The company concluded its submission by urging the court to dismiss the class-action lawsuit “with prejudice,” asserting that the plaintiffs failed to show any false statements or link between the alleged claims and the stock price drop. The motion seeks to have the case thrown out entirely.
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