Class Action Lawsuit Takes Aim at Marathon Digital’s Accounting of Crypto Assets

News | June 13, 2024 By:

On Tuesday, June 4, 2024, an amended class action complaint was filed in the US District Court for the District of Nevada against Marathon Digital Holdings, Inc. and several of its current and former executives.

Marathon Digital Holdings is a technology company focused on bitcoin mining and other digital asset operations. The complaint centers around the company’s accounting practices related to its bitcoin holdings and mining operations during the class period. Marathon routinely mines bitcoin and other cryptocurrencies using specialized computer equipment and reports the value of its holdings each quarter.

However, the plaintiffs claim Marathon misreported key financial metrics like the value of its bitcoin assets and the cost of mining new coins. It’s alleged the company did not properly assess for impairment of bitcoin on its balance sheet as required by Generally Accepted Accounting Principles. The SEC reportedly sent comment letters to Marathon questioning its accounting but the company did not make this public.

In late February 2023, Marathon disclosed it received another letter from the SEC about prior financial statements. The company simultaneously canceled its upcoming earnings call and said several years of reported results could no longer be relied upon. The plaintiffs state this news caused the stock to fall over 8% on March 1st.

Two weeks later, Marathon restated its financials from 2021 and parts of 2022, finding material differences in things like asset valuation and costs. The complaint argues the executives knew or should have known proper accounting was not followed, especially since impairment testing is a clear rule. It’s also noted the departures of two CFOs during this period raise questions.

The amended class action seeks damages for investors under securities laws, alleging false statements and omissions injured shareholders.

Please contact BlockTribune for access to a copy of this filing.