Bitcoin (BTC) mining giant Core Scientific recently faced an investigation by law firm Pomerantz. According to him, the mining company would carry out several commercial and financial frauds in 2022, to the detriment of its shareholders, who suffered as a result of the fall in its stock market share.
The challenges keep coming for Core Scientific
After the company declared bankruptcy last month Core Scientific is now facing a securities fraud investigation led by law firm Pomerantzspecializes in securities litigation.
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Several times during 2022, the mining company would engage in illegal commercial activities. It all starts with the release of a Culper Research reportA structure specializing in research related to the investment sector accusing Core Scientific of:
- He overestimated the mining activity with a series of dangerous operations;
- He changed the financial regulations regarding the stock exchange name without first discussing it with the shareholders.
Additionally, in the case of the Celsius Network in September 2022, the mining company was accused of deliberately imposing artificially high fees and breaching contractual obligations. while threatening to break his contract with the loan and borrowing company. The revelation sent Core Scientific (CORZQ) tumbling, down 10.3% in less than 24 hours.
As a reminder, bankrupt cryptocurrency exchange Celsi In 2020, it reached an agreement with a mining company to deploy 37,000 mining machines.
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Basic science between bankruptcy and refinancing
While Core Scientific is a mining behemoth that accounts for about 10% of the Bitcoin (BTC) network hashrate, many doubts about its financial capabilities were raised in October 2022. Indeed, the mining company had disclosed to the public. uncertainties As the law firm Pomerantz noted on October 28, 2022, around fragile economic health:
” Given the uncertainty surrounding the company’s financial condition, there are serious doubts about the firm’s ability to continue as a going concern. »
Moreover, it turns out like this the company had gotten rid of its Bitcoin reserves in a very short period of time. Thus, its shares fell from 1051 BTC on September 30, 2022 to 24 BTC on October 27, 2022.
As evidenced by the Core Scientific stock price, these two announcements had a bombshell effect. who has lost 78% in one day. The asset’s price was around $0.22 at the time, a 95% drop in less than a year.
Figure 1 – Core Scientific (CORZQ) stock price fell from $10 to $0.08 from January 2022 to January 2023
A few weeks later, in December 2022 Core Scientific officially declares bankruptcy Filing for Chapter 11 bankruptcy protection in the United States. In early 2023, the BlackRock juggernaut, the company’s major shareholder, 70 million in loans with several other investors to help the mining company.
👉 To learn more about the bankruptcy of Core Scientific and the loan from BlackRock
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Source: GlobeNewsWire, TradingView
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