Core Scientific Was Investigated For Securities Fraud Causing Stock Prices Free To Be Dumped
- According to a recent assessment by Culper Research, Core Scientific has “widely oversold” its mining businesses.
- The investigation was started by the securities class action law firm Pomerantz LLP. The company charged the mining company with overselling its hosting services as well as its mining platforms in 2021.
Despite declaring bankruptcy, Bitcoin mining company Core Scientific is still facing financial and legal difficulties. An allegation of the company’s “securities fraud” is under investigation.
New York-based law firm Pomerantz LLP says it has begun investigating whether Bitcoin mining firm Core Scientific the company’s management has the ability to engage in securities fraud and other illegal business activities that cause the stock price to be free to be dumped.
The investigation was prompted by a report from Culper Research in 2022, which alleged that Core Scientific had “wildly oversold” the company’s dedicated servers and mining equipment by 2021, also omitted the 180-day lock-in period for more than 282 million shares, leaving them free to be dumped in March 2022.
Pomerantz LLP further revealed that in late October 2022, Core Scientific announced that due to the uncertain financial position of the company, so the company decided to file for bankruptcy. At that time, the company claimed to only hold 24 Bitcoins.
In addition, Pomerantz LLP also highlighted another incident on September 28, 2022, in which crypto lender Celsius Network filed for bankruptcy court, accusing Core Scientific of violating the terms of residence. automatically, add inappropriate surcharges, and fail to meet contractual obligations. This resulted in CORZ stock price dropping 10.3% the next day.
The law firm raised many significant questions about Core Scientific when the company still insisted that it would continue to mine Bitcoin during the restructuring of the business. With the facts gathered, Pomerantz LLP said it was investigating on behalf of Core Scientific investors and urged any investors who suffered losses to join the lawsuit.
Due to the collapsed cryptocurrency lender’s failure to pay its electricity costs, Core Scientific had decided to shut down 37,000 mining rigs it was hosting for Celsius as of January 4. The Bitcoin miner claims that this was a major factor in the liquidity problems that resulted in its filing for Chapter 11 bankruptcy on December 21.
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