3 months ago 1 min read

Core Scientific Under Investigation for Securities Fraud That Allowed Stock Prices Drop Freely

core scientific-bitcoin-bankruptcy

Core Scientific, a bitcoin mining company, is still having legal and financial issues despite filing for bankruptcy. Investigations are being conducted into a claim of "securities fraud" by the company.

The New York-based law firm Pomerantz LLP claims it has started looking into whether Core Scientific, a company that mines bitcoins, has management that is capable of engaging in securities fraud and other illegal business practices that could lead to a free-falling stock price.

The Culper Research report from 2022 that claimed Core Scientific had "wildly oversold" the company's dedicated servers and mining equipment by 2021 and omitted the 180-day lock-in period for more than 282 million shares, leaving them free to be dumped in March 2022, served as the impetus for the investigation.

Pomerantz LLP further disclosed that Core Scientific stated in late October 2022 that the business has decided to file for bankruptcy due to its precarious financial situation. The business stated that it only had 24 Bitcoins on hand at the moment.

The cryptocurrency lender Celsius Network filed for bankruptcy court on September 28, 2022, claiming Core Scientific of breaking the terms of residence. This issue was also highlighted by Pomerantz LLP. automatically, tack on unwarranted surcharges, and breach contractual commitments The following day, the price of CORZ shares fell by 10.3% as a result.

When Core Scientific insisted that it would keep mining bitcoin while the company was restructuring, the law firm highlighted a number of important concerns about the company. Pomerantz LLP announced that it was conducting an investigation on behalf of Core Scientific investors once the information was acquired and asked any investors who had lost money to join the action.

As of January 4, Core Scientific has made the decision to turn off 37,000 mining rigs it was hosting for Celsius due to the defunct cryptocurrency lender's refusal to pay its electricity charges. This, was a significant contributing cause to the liquidity issues that led to its filing for Chapter 11 bankruptcy on December 21.

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