According to Cointelegraph, Bitcoin mining company Hut 8 Corp has filed a motion to dismiss a class-action lawsuit initiated by its shareholders. The lawsuit was reportedly influenced by a short-seller report from J Capital Research, which accused Hut 8 of overpaying for a company with significant operational challenges.
In a filing submitted to a New York federal court on December 2, Hut 8 alleged that J Capital Research conducted a campaign aimed at devaluing Hut 8’s stock for personal gain. The crypto mining firm argued that the case stems from a short seller's attempt to profit from its short position in Hut 8, to the detriment of ordinary shareholders. Hut 8 described these actions as 'short and distort' schemes, which are often followed by shareholder class actions that echo the short seller’s negative assessments, labeling the report as a 'corrective' disclosure. The company contended that such cases are frequently dismissed and argued that this lawsuit should meet the same fate.
The controversy began when J Capital Research released a report in January, alleging that Hut 8 had overstated the profitability of its acquisition of US Bitcoin Corp (USBTC), concealed operational issues at a Texas facility, and potentially hid ownership shares. Following the report's publication, Hut 8's stock plummeted by 23%, leading to multiple shareholder lawsuits in March. These lawsuits were filed by individuals who incurred losses and others who claimed that all shareholders who purchased Hut 8 shares during the specified period are entitled to compensation.
Hut 8 countered these claims by stating that its stock price has surged approximately 300% since the release of J Capital’s report and has 'fully recovered.' The company also noted that many of its forward-looking public statements were safeguarded by 'safe harbor provisions,' and that warnings regarding USBTC’s limited operating history had already been disclosed. USBTC held a 50% stake in a joint venture Bitcoin mining facility in Texas, which Hut 8 acquired through a merger in November 2023.
The firm further argued that the lawsuit failed to demonstrate that the alleged misrepresentations were false when made, that investors were genuinely harmed, and that there was a direct connection between the allegations and the decline in stock price. Hut 8 concluded that the shareholder complaint should be dismissed entirely, with prejudice, and requested any other relief the Court deems appropriate.
On December 3, Hut 8's shares closed 3.6% lower at $25.06, with a slight 0.5% increase in after-hours trading, as reported by Google Finance. The Bitcoin miner’s stock has risen nearly 99% this year and has gained 296% since hitting a low of $6.33 in January.