Recently, the Bitcoin (BTC) mining giant Core Scientific has been facing an investigation by the law firm Pomerantz. According to him, the mining company would have carried out several commercial and financial frauds in 2022, to the detriment of its shareholders harmed by the fall of its stock market share.
Difficulties keep coming for Core Scientific
After declaring itself bankrupt last month, the company Core Scientific is now facing a securities fraud investigation led by law firm Pomerantzspecializing in securities litigation.
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On several occasions during the year 2022, the mining company would have carried out illegal commercial actions. It all starts with the publication of a Culper Research reporta structure specializing in investigations related to the investment sector, which accuses Core Scientific of having:
- Overvalued its mining activities by a series of dodgy transactions;
- Modified the financial rules related to its stock market title without first discussing it with its shareholders.
Additionally, in the case with Celsius Network in September 2022, the mining firm was accused of intentionally applying artificially high fees and violating its contractual obligations while threatening to break his contract with the loan and borrowing company. This revelation had resulted in the fall of the action Core Scientific (CORZQ), recording a drop of 10.3% in less than 24 hours.
As a reminder, bankrupt cryptocurrency exchange Celsius had reached an agreement with the mining company in 2020, providing for the hosting of 37,000 mining machines.
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Core Scientific between bankruptcy and refinancing
While Core Scientific was a mining behemoth accounting for nearly 10% of the Bitcoin (BTC) network hashrate, many doubts about his financial capabilities spread in October 2022. Indeed, the mining company had publicly disclosed its “ uncertainties around its fragile economic health on October 28, 2022, as the law firm Pomerantz points out:
” Given the uncertainty regarding the company’s financial situation, there is significant doubt about the firm’s ability to continue its activity. »
Moreover, it turns out that the company had gotten rid of its Bitcoin reserves in a very short period of time. Thus, its stocks fell from 1051 BTC on September 30, 2022, to 24 BTC on October 27, 2022.
These two announcements had the effect of a bomb, as evidenced by the Core Scientific share price who has plunged 78% in a single day. The price of the asset was then around 0.22 dollars, a drop of 95% in less than a year.
Figure 1 – Core Scientific (CORZQ) stock price from January 2022 to January 2023 falling from $10 to $0.08
A few weeks later, in December 2022, Core Scientific officially announces its bankruptcy filing for Chapter 11 bankruptcy protection in the United States. In early 2023, the BlackRock juggernaut, the company’s main shareholder, granted a loan of 70 million with several other investors to help the mining company.
👉 To learn more about the bankruptcy of Core Scientific and the loan made by BlackRock
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Source: GlobeNewsWire, TradingView
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Always enthusiastic about new technologies, I gradually moved closer to Web3-related activities during the year 2021. Over time, I wanted to add my stone to the building. It was then that I became an editor, with the aim of explaining cryptocurrency-related topics to as many people as possible.
Timothy Bourbotte
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