As Core Scientific teeters on the brink of bankruptcy, the mining giant is in the crosshairs for probable fraud. In a statement released on January 9, law firm Pomerantz announced it has opened an investigation into claims on behalf of Core Scientific investors. The company allegedly engaged in fraud and illegal trading practices.
Core Scientific in the sights of the Pomerantz law firm
The law firm of Pomerantz advised in a January 9 press release that it has opened an investigation into Core Scientific to determine whether the company or its officers committed securities fraud or engaged in other illegal practices.
Pomerantz is known as one of the leading players in securities class actions. The firm has offices in New York, Chicago, Los Angeles and Paris.
Through this investigation, users may be able to unravel the incidents that may have caused the company’s stock price to fall. According to Pomerantz’s release, one of the incidents that caused the decline was Culper Research‘s report released on March 3, 2022.
The latter states that Core Scientific overvalued its mining and hosting business in 2021 and that the company lifted a 180-day post-IPO lockup on more than 282 million shares. This allowed insiders to sell their assets in the market just five days after the report was released, without regard to the interests of minority shareholders.
As a result, the release of the report caused Core Scientific‘s share price to drop 9.4% on March 3, 2022.
Core Scientific shares on the brink of collapse!
Pomerantz said two events would have negatively impacted Core Scientific‘s stock price.
The first is the filing of Celsius Network and affiliated entities with the bankruptcy court, which reportedly caused the stock price to fall 10.3% on September 29 ;
The second event was an announcement by the company regarding uncertainty about its financial condition and ability to continue operations. This led to a 78.1% drop in the share price on October 27.
Recall that on December 21, Core Scientific was at the point of filing for Chapter 11 bankruptcy protection.
The mining company has been rescued from bankruptcy many times. Most notably by:
- B Riley Financial, which invested $72 million in the company;
- By an investment of 37.4 billion ;
- By BlackRock with 17 billion.
With this annus horibilis, where electricity is very expensive and the price of Bitcoin is way down, cryptocurrency mining companies are between a rock and a hard place. This investigation by Pomerantz could compound the problems of Core Scientific, which is still trying to find cash to get back on its feet…
As a journalist at Coinpri, I’ve been captivated by the world of bitcoin and blockchain since 2020. The decentralized aspect of Bitcoin particularly piqued my interest. Since then, I’ve been working constantly to spread my knowledge, hoping one day to see a world where everyone fully enjoys their financial freedom.
