Hut 8 Files Motion to Dismiss Lawsuit by Shareholders
Hut 8 Corp., a prominent Bitcoin mining company, has filed a motion in a New York federal court to dismiss a class-action lawsuit initiated by its shareholders. The lawsuit stems from allegations made by short-seller J Capital Research, which accused Hut 8 of overpaying for US Bitcoin Corp. (USBTC), a company with operational challenges. Hut 8 argues that the report was a deliberate attempt by the short-seller to devalue the company’s stock for its financial gain.
Hut 8 Denounces “Short-and-Distort” Strategy
In its December 2 filing, Hut 8 referred to the lawsuit as part of a “short-and-distort” strategy. This strategy, Hut 8 claims, involves short-sellers attempting to manipulate stock prices downwards and then using shareholder lawsuits to amplify their claims. The company argues that such tactics are common in the financial world and that these lawsuits often result in cases being dismissed by courts. Hut 8 has urged the court to dismiss this case in similar fashion.
Allegations of Misrepresentation and Stock Decline
The lawsuit is based on allegations made by J Capital Research in January 2024, which claimed that Hut 8 had misrepresented the profitability of its acquisition of USBTC, concealed operational flaws at a Texas mining facility, and failed to disclose ownership stakes. Following the release of the report, Hut 8’s stock price dropped by 23%, prompting multiple shareholder lawsuits in March. Plaintiffs argued that they suffered financial losses from the decline in stock value and sought compensation.
Stock Recovery and Legal Defense
Hut 8’s stock price has since rebounded, rising approximately 300% since the report’s release. The company contends that many of its public statements are protected by “safe harbor provisions” under securities law. Hut 8 maintains that USBTC’s operational risks were adequately disclosed to the public, and that the plaintiffs have failed to prove any false statements or link between the stock price drop and the alleged misrepresentations.
Hut 8 Requests Dismissal with Prejudice
In its motion, Hut 8 has urged the court to dismiss the case “with prejudice,” meaning the case cannot be refiled in the future. The company asserts that the plaintiffs have not shown any valid claims or evidence of harm. Hut 8 further argues that no legal grounds exist for the claims to proceed and that the lawsuit should be dismissed in its entirety.
Stock Performance and Investor Sentiment
As of December 3, Hut 8’s shares closed at $25.06, a 3.6% drop for the day, but the stock gained 0.5% in after-hours trading. Despite the temporary drop in stock price following the short-seller’s report, the company’s stock has surged nearly 99% year-to-date and has climbed 296% from its January low of $6.33.
