Bitcoin miners Core Scientific faces “securities fraud” allegations

Sahana Kiran
Source – Unsplash

Bitcoin mining giant Core Scientific has been the topic of discussion for an array of reasons. Starting from its bankruptcy to shutting down 37,000 mining rigs of Celsius, the financial woes of the miners have piled on. Now, the possibility of “securities fraud” is beginning to surface.

A recent report by Culper Research points out that Core Scientific has “widely oversold” mining businesses. During an investigation to see if the Bitcoin miner was part of any form of “securities fraud and other unlawful business practices”, Culper Research made several discoveries.

The securities class action firm Pomerantz LLP instigated the investigation. The firm accused the mining organization of overselling, not just its mining platforms but also its hosting business in 2021.

Throughout 2022, multiple instances have highlighted a plummet in the firm’s stocks. Officials at Core Scientific reportedly “abandoned all pretense of care for minority shareholders.” Following this news, Core Scientific’s stock price dropped 9.4% on March 3, 2022. The firm also “waived the 180-day lockup on over 282 million shares, making them free to be dumped in just 5 trading days.”

This was followed by a motion filed by Celsius Network back on September 28, 2022. The firm accused Core Scientific of breaking the automatic stay clauses, adding false fees, and not fulfilling its contractual responsibilities. The stock price of the firm dipped by 10.3 percent right after.

Furthermore, on October 27, 2022, the Bitcoin miner’s financial conditions were brought to light. With just 24 BTC under its ownership, Core Scientific plummeted by 78.1 percent.

Core Scientific releases November and December numbers

The months of November and December 2022 were significantly better for Core Scientific despite its financial situation. According to data, the company mined 1.4K BTC in both months. Given that just 1.3K BTC were mined in October, this was thought to be significant.

At the end of December, Core Scientific had around 152K and 153K self-mining servers running, making up about 63% and 66% of its overall server count. The self-mining hashrate for November and December was 15.4 EH/s and 15.7 EH/s, respectively.

Additionally, alongside its counterparts, Core Scientific’s stock price surged by 22.86 percent today and was at $0.086.