Bit Digital, a bitcoin mining company traded on the Nasdaq stock exchange, is the subject of a class action lawsuit alleging that the company manufactures the volume of Bitcoin (BTC) mining operations.

According to a lawsuit filed Wednesday in the Southern District of New York by plaintiff Anthony Bowles, Bit Digital misled investors and made significantly false statements about the extent of the Bitcoin mining business, causing significant financial damage to investors.

In particular, the plaintiff cites an investigation report from J Capital Research, which claims that Bit Digital is simply lying about bitcoin mining operating all over China. The company’s website claims that there are currently over 40,000 mining platforms in operation with a hash rate of 2253 BTC, with over 1500 BTC successfully extracted since the beginning of 2020.

However, researchers at J Capital say they have contacted government officials in the Chinese provinces where Bit Digital claims to be active, only to find that no one has heard of it before.

When J Capital Research made headlines, Bit Digital’s share price was down 25%. From the BTBT peak of $ 29.27 in early January, the stock price has since fallen 44% to its current value of around $ 16.

Bit Digital was released in response to J Capital’s allegations on Tuesday, saying the company has provided all of its files to the SEC and is always striving to provide investors and regulators with accurate data.

However, the plaintiff in the lawsuit against Bit Digital claims that the company’s day-to-day management – CEO Min Hu and CFO Erke Huang – were able to dictate the content of all business-related documents:

“Because of its position in the company, [Hu and Huang] had the power and authority to control the content of the company’s reports to the Securities and Exchange Commission, press releases and presentations by stock analysts, money and portfolio managers and institutional investors, ie a market.”
Bowles is seeking compensation for the 1,000 Bit Digital shares he received for $ 21.81 on December 12, 2020, plus other compensation for damages, fees and legal fees.

The plaintiff demanded a lawsuit. To date, Bit Digital has not provided a legal response, and the company has not responded to Cointelegraph’s request for comment.

Source: CoinTelegraph