The US District Court threw out a class-action case that investors had made against Bitcoin miner Iris Energy. Investors said that during its initial public offering (IPO) in late 2021, the company hid important risks and gave false information.
In a decision on September 27, Judge Jamel Semper said that the plaintiffs had not shown that Iris Energy or its leaders lied to investors or misled them on purpose. The case said that during the IPO, the company and brokers such as J.P. Morgan and Citigroup Global Markets broke the Securities Act and the Securities Exchange Act.
The investors’ main complaints were that Iris Energy’s financial records were not correct and that the company wasn’t clear about the loans it took to pay for its mining activities. They said that these missing information gave a false picture of the company’s financial health, especially when it came to its assets, profits, and losses. The court did say that Iris Energy did not have to share all the details of its loan deals, and there was no significant evidence that its financial disclosures were not accurate.
When Iris Energy went public on November 17, 2021, it raised $232 million. Even though shares started out at $28, their value dropped quickly, just like the rest of the bitcoin market. By January 24, 2022, the stock had dropped by 69%, and the price of Bitcoin had dropped by a sharp 36% during the same time period.
When the case was thrown out, Iris Energy’s lawyers pointed out that the plaintiffs were trying to get back money they lost because of the general drop in the cryptocurrency market, not because the company did anything wrong.
Culper Research, a short-selling business, has looked into Iris Energy beyond the case. They say the company is overvalued and doesn’t put enough money into high-performance computing (HPC). Culper said the company made big claims about its future in HPC without having the money to back them up.
Even with these problems, Iris Energy is still growing. In the next few years, it plans to add more activities and new mining rigs to improve its skills. The case was thrown out, which is a big win for the company as it deals with legal and market pressures.
