Lawsuit Seeks Class Status Over Alleged Misleading Statements in Stronghold Crypto Miner IPO

News | February 22, 2024 By:

On Monday, February 19, 2024, Allegheny County Employees’ Retirement System filed a motion in the United States District Court for the Southern District of New York seeking to certify a class action lawsuit against Stronghold Digital Mining Inc and other defendants.

The proposed class action concerns Stronghold’s initial public offering that took place in October 2021. Allegheny, represented by the law firm Rosen Law, alleges that Stronghold’s offering materials contained misrepresentations about planned delivery schedules and performance capabilities of Bitcoin mining machines the company had ordered from one of its suppliers, MinerVa Semiconductor Corp.

Specifically, the complaint claims Stronghold misstated that MinerVa would meet tight delivery deadlines for the miners, including a scheduled first delivery less than two weeks after the IPO. However, power outages at MinerVa’s facility where the machines were being assembled had already prevented timely delivery.

Allegheny also alleges Stronghold misrepresented the individual computing power or “hash rate” of the MinerVa miners, as well as Stronghold’s overall ability to reach a targeted total hash rate of 2,100 petahash per second by the end of 2021 across its mining operations. Due to the delivery delays and poorer-than-claimed performance of the miners received, Stronghold only achieved around 800 petahash per second by December 31, 2021.

In supporting its class certification motion, Allegheny argues that the proposed class satisfies all the requirements of Federal Rule of Civil Procedure 23. This includes the class being sufficiently large or “numerous,” sharing common issues of fact and law around the alleged misrepresentations, and Allegheny having claims typical of the class. Rosen Law asserts it is qualified to serve as class counsel.

If certified, the class action would seek to represent all investors who purchased Stronghold stock in or traceable to its October 2021 IPO and suffered financial losses. Stronghold’s share price has declined over 80% from its IPO price of $19. The company’s quarterly and annual financial results in March 2022 revealed the delivery delays and impairment charges related to the MinerVa miners.

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