Bitfarms in Hot Seat: Miner Accused of Cooking the Books in Capital Raise
Bitcoin miner Bitfarms just got served—with a lawsuit alleging financial sleight-of-hand during a recent capital raise. Investors are crying foul over what they claim is improper accounting, and the timing couldn’t be worse as the industry fights for credibility.
Subheading: ’Creative Accounting’ or Straight-Up Fraud?
The suit alleges Bitfarms played fast and loose with reporting requirements, potentially misleading shareholders. Because nothing says ’trust us’ like a balance sheet that needs its own decoder ring.
Closing thought: Another day, another crypto company learning that SEC scrutiny doesn’t disappear just because you put ’blockchain’ in your pitch deck.
Complaint Alleges Deficient Financial Reporting Controls
According to one complaint filed Monday, the company failed to maintain adequate internal controls over financial reporting.
As a result, proceeds from digital asset sales were recorded as operating cash FLOW rather than investing cash flow. The firm also overstated its remediation of a material weakness tied to warrant transactions.
The lawsuit notes that on Dec. 9 last year, Bitfarms announced errors in its consolidated financial statements for both 2022 and 2023. It explained that an SEC review showed proceeds from digital asset sales belonged under investing activities. The Bitcoin mining firm also identified an error in accounting for warrant redemptions in 2023.
Bitfarms’ Credibility At Stake After Cash Flow Errors
Investors reacted swiftly to the restatement announcement. Bitfarms’ share price fell 6% to close at $2.1 on Dec. 10. Analysts warn that restating financials can undermine market trust and trigger further regulatory scrutiny.
Bitfarms operates a network of mining farms that secure the Bitcoin blockchain. In recent years, it has expanded rapidly but also grappled with volatile cryptocurrency prices and rising energy costs. The decision to revise past financial statements could further dent confidence in its management.
The class action covers anyone who purchased Bitfarms securities between March 21, 2023, and Dec. 9, 2024. Shareholders who wish to serve as lead plaintiff must file with the court by July 8, 2025.
Even shareholders who take no formal role can still share in any recovery. Those who remain absent class members preserve their rights without actively participating in court proceedings.
