Investors Allege Financial Misreporting in Second Amended Complaint Against Marathon Digital Holdings
On Wednesday, April 2, 2025, court-appointed co-lead Plaintiffs Todd Langer, Mary Barida, and Jacks Way LLC filed a second amended complaint in the US District Court for the District of Nevada against Marathon Digital Holdings, Inc., and its former executives Merrick Okamoto, Frederick G. Thiel, Simeon Salzman, and Hugh J. Gallagher.
The lawsuit alleges violations of federal securities laws under Sections 10(b) and 20(a) of the Securities Exchange Act of 1934 and Rule 10b-5, seeking damages for investors who purchased Marathon’s common stock between May 10, 2021, and February 28, 2023.
The plaintiffs represent a proposed class of investors who acquired Marathon’s publicly traded stock during the specified period, claiming they suffered losses due to misrepresentations and omissions in the company’s financial reporting. Marathon, a Nevada-based digital asset technology firm focused on Bitcoin mining, is accused of failing to adhere to Generally Accepted Accounting Principles (GAAP) in its financial statements, particularly regarding the valuation of its Bitcoin holdings and the accounting for its Bitcoin mining pool, Marapool.
According to the complaint, Marathon misrepresented how it assessed the impairment of its Bitcoin assets. The company stated it valued its Bitcoin based on the lowest price quoted on its principal market exchange since acquisition, as required by GAAP. However, it allegedly used an arbitrary daily cutoff time to determine Bitcoin’s fair value, violating accounting standards. This practice led to incorrect impairment calculations, which were not disclosed until February 28, 2023, when Marathon announced it would restate nearly two years of financial statements.
The complaint further alleges that Marathon misreported revenues and costs related to Marapool, its Bitcoin mining pool operational from September 2021 to May 2022. Despite controlling the pool’s operations, software, and digital wallet, Marathon accounted for itself as an agent rather than a principal, understating its cost of revenues by 25.8% for fiscal year 2021. The Securities and Exchange Commission (SEC) raised concerns about these practices starting April 8, 2022, but Marathon did not disclose this correspondence until July 16, 2024, over a year after the class period ended.
On February 28, 2023, Marathon canceled its fiscal year 2022 earnings call with four hours’ notice and disclosed receiving an SEC comment letter about accounting errors. The company later admitted to multiple GAAP violations, prompting the restatement of financial results for 2021 and the first three quarters of 2022. Following these disclosures, the market value of Marathon’s stock declined, causing losses for investors, the plaintiffs claim.
The lawsuit names former CEO and Executive Chairman Merrick Okamoto, current CEO Frederick G. Thiel, former CFO and Chief Accounting Officer Simeon Salzman, and former CFO Hugh J. Gallagher as defendants. The plaintiffs assert that these executives knowingly or recklessly issued false statements, certified misleading SEC filings, and failed to disclose SEC criticisms. Salzman left the company in April 2023, and Gallagher announced his departure in March 2023, shortly after the restatement announcement.
The plaintiffs seek class action certification under Federal Rule of Civil Procedure 23, arguing that the number of affected investors makes individual lawsuits impractical. They allege that Marathon’s stock traded on an efficient market, supporting a presumption of reliance on the company’s misrepresentations. The complaint demands a jury trial, compensatory damages, prejudgment and post-judgment interest, and reasonable attorneys’ fees and costs.
Marathon, now known as MARA Holdings, Inc. since August 29, 2024, has its principal offices in Fort Lauderdale, Florida, and its stock trades on the Nasdaq under the ticker “MARA.”
Please contact BlockTribune for access to a copy of this filing.
