Key Points:
The Bitcoin mining company, backed by Tether, is facing allegations of financial misrepresentation and tax evasion. The claims were brought forward by Joshua Porter and Gulsen Kama, who allege they were fired for exposing the misconduct of Northern Data’s CEO and COO.
Former Northern Data executives’ lawsuit, filed in the Central District Court of California, accuses Northern Data of hiding its financial instability and evading tens of millions of dollars in taxes.
Initially focused on cryptocurrency mining, Northern Data rebranded in 2018 to broaden its scope into high-performance computing data centers. Tether holds a 51% stake in the company. The lawsuit not only covers tax issues but also claims the company retaliated against Porter and Kama for raising these concerns.
Joshua Porter, appointed COO of Northern Data’s US subsidiary in April 2022, was promoted to North America president and CEO in January 2023. He was dismissed in March 2023 after expressing concerns about the company’s financial health, including a $30 million German tax liability and additional $8 million in other liabilities, with only $17 million in cash and a monthly burn rate of $3-4 million.
Porter also highlighted Northern Data’s alleged tax evasion to the executive team. The complaint claims Deloitte refused to support Northern Data’s decision not to pay US taxes on crypto mining profits, leading the company to take unlawful actions to avoid taxes in 2021. Porter warned that an IRS audit could render the company insolvent.
Gulsen Kama, appointed North America CFO in July 2022 and promoted to group deputy CFO, also raised concerns with KPMG about the company’s liquidity. Her employment was terminated after she requested the preservation of historical records and documentation. The plaintiffs allege a pattern of fundraising followed by exaggerated press releases to inflate stock prices.
Shareholders approved a capital raise at the AGM on June 12, 2023. Despite planning an IPO in the United States, Northern Data has yet to comment on the lawsuit or the allegations.
DISCLAIMER: The information on this website is provided as general market commentary and does not constitute investment advice. We encourage you to do your own research before investing. |
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