Hut 8 Settles Investor Lawsuit for $2.35 Million Over Merger Disclosures
Hut 8 has agreed to pay $2.35 million to settle a securities class action lawsuit alleging the company failed to disclose operational issues at a key bitcoin mining venture after its 2023 merger with U.S. Bitcoin Corp. (USBTC). The lawsuit, filed in the U.S. District Court for the Southern District of New York, claimed Hut 8 overstated the benefits of the all-stock merger while concealing persistent energy curtailment and internet connectivity problems at the King Mountain mining site in Texas, in which USBTC held a 50% interest. The litigation gained traction after a critical short-seller report from J Capital Research in January 2024 caused Hut 8's stock to drop over 23%. The settlement, which requires court approval, represents about 19.6% of the estimated maximum recoverable damages. Hut 8 denies any wrongdoing. Meanwhile, Hut 8 shares have surged over 640% in the past year as the company pivots to AI data centers and high-performance computing.
Key facts
- Hut 8 agrees to $2.35 million settlement in securities class action over merger with US Bitcoin Corp.
- Investors alleged Hut 8 hid energy curtailment and internet issues at King Mountain mining site.
- Lawsuit escalated after J Capital Research short-seller report caused share price to drop 23%.
- Settlement represents 19.6% of estimated maximum recoverable damages, above industry averages.
- Hut 8 stock surged over 640% in past year amid pivot to AI and high-performance computing.