Class Action Filed Against Bitcoin Digital Miner Bit Over Digital Fraud Allegations

A class action lawsuit has been filed against Bit Digital, a Nasdaq-listed bitcoin mining company, following recent allegations of fraud.

According to a court document filed in New York’s Southern District Court on Thursday, the class action seeks to recover compensation for Bit Digital investors who purchased stock between Dec. 21, 2020 and Jan. 8, 2021.

Defendants allege that the mining company made false and / or misleading statements and failed to disclose the true extent of its mining operations, and said it had 22,869 bitcoin machines in China, per filing.

On Tuesday, Bit Digital denied allegations of fraud brought against it by J Capital Research in a report which claimed the company had “attempted to downplay the criminality” of its actions.

J Capital also claimed that the large number of mining machines reported by the company was “not possible” after reports verified with his government contacts in China.

“Defendants’ [Bit Digital] positive statements about the Company’s business, operations and prospects were materially misleading and / or without reasonable grounds, ”the court filing reads.

Bit Digital said on Tuesday that its mining operations in mainland China are controlled by Hong Kong’s XMAX, and that all “utility bills and other expenses” are paid to Hong Kong suppliers.

Bit Digital must respond within a 60 day period; failure to do so would result in a default judgment for relief.

Shares of the company (BTBT) declined 2.15% on Friday and are currently down 45% year to date.