Hut 8 Seeks to Dismiss Shareholder Lawsuit, Asserts It Originated from a Short Seller

Bitcoin mining company Hut 8 Corp. has submitted a motion in a federal court in New York to dismiss a class-action lawsuit filed by its shareholders.

The lawsuit claims that the firm misled investors regarding its acquisition of US Bitcoin Corp. (USBTC), a company reportedly facing operational challenges.

However, Hut 8 contends that the lawsuit is a result of a short-seller campaign intended to lower its stock price for profit.

Hut 8 Accuses J Capital Research of Orchestrating the Scheme

In its filing dated December 2, Hut 8 accused J Capital Research, a short-selling firm, of executing what it referred to as a “short-and-distort” scheme.

The company argued that J Capital’s report from January, which claimed Hut 8 had overpaid for USBTC and hid significant issues at a Texas mining site, led to a substantial drop in its stock price.

Following the report, Hut 8’s shares fell by 23%, resulting in several lawsuits in March from investors seeking restitution for their losses.

Hut 8 maintains that the report misrepresented the facts and asserts that its stock has since recovered, increasing by approximately 300% from its lows in January.

The firm emphasized that it had revealed USBTC’s limited operational history and pointed out that many of its forward-looking statements were safeguarded under legal “safe harbor provisions.”

The merger with USBTC, finalized in November 2023, included a 50% stake in a Bitcoin mining facility located in Texas.

The @Hut8Corp has filed a motion to dismiss a class-action lawsuit from shareholders, alleging it stems from a short seller’s attempt to profit at the expense of ordinary investors. The lawsuit claims the firm overstated the profitability of its acquisition of US Bitcoin Corp and… pic.twitter.com/xR9We5KKIS

— VaaSBlock (@vaasblock) December 4, 2024

Despite the allegations in the lawsuit, Hut 8 argued that shareholders have not proven that the alleged misrepresentations were false at the time they were made or that they resulted in actual harm to investors.

The company asserted that the recovery of the stock price undermines the foundation of the lawsuit.

“These short-and-distort cases are frequently dismissed,” Hut 8 stated in its motion, urging the court to reject the shareholder complaint.

It requested that the case be dismissed “in its entirety, with prejudice,” and sought additional relief as deemed appropriate by the court.

Hut 8’s stock has demonstrated significant resilience this year, rising nearly 99% and trading at $25.06 as of December 3.

After-hours trading indicated a slight 0.5% increase. Since reaching a low of $6.33 in January, the stock has achieved an impressive 296% gain, according to Google Finance.

Bitcoin Miners in Texas Required to Register

Last month, the Public Utilities Commission of Texas (PUCT) enacted a new regulation mandating Bitcoin miners connected to the Energy Reliability Council of Texas (ERCOT) grid to register and provide essential information about their operations.

The rule requires miners to disclose their facilities’ locations, ownership information, and electricity consumption to the state agency.

According to the regulation, Bitcoin miners must register within one business day of connecting to the ERCOT grid.

The registration must also be renewed annually by March 1.

Bitcoin miners who do not comply with the new requirements may face significant penalties.

Violators will incur a Class A violation, which carries fines of up to $25,000 per day.

In another development, the Securities and Exchange Commission (SEC) has initiated a lawsuit against investment firm Touzi Capital, accusing it of defrauding investors and misrepresenting the liquidity and profitability of its crypto asset mining fund.

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