From one fall to another – This law firm is increasing the pressure on a Core Scientific already in difficulty, by conducting an investigation into possible fraud that the company or its directors may have committed.
Core Scientific under investigation: IPO procedures called into question
In a press release dated January 9, the law firm Pomerantz announced that it had opened an investigation into Core Scientific, to determine whether the company or its officers have engaged in “securities fraud or other illegal business practices”. The firm says it is conducting these investigations on behalf of Core Scientific investors.
Pomerantz is known as one of the pioneers of securities class actions. It has offices in New York, but also in Chicago, Los Angeles, and in Paris. As part of its investigation of Core Scientific, the firm is interested in various incidents that may have fall in stock price of the society.
One of these events that Pomerantz relates in his press release concerns the March 3, 2022 report from Culper Research, which indicated that Core Scientific ” greatly overvalued » its mining and hosting activities in 2021. The report also pointed to the fact that the company also waived the 180-day post-IPO blocking periodover more than 282 million shares.
During this period, insiders who hold shares cannot sell their assets. However, by lifting this blockage, Core Scientific allowed these shares to flow into the market, after only 5 days of trading following the publication of the Culper Research report. The document pointed out that Core Scientific did not care about its minority shareholders.
The publication of this report would have led a drop of 9.4% of Core Scientific’s stock price on March 3, 2022.
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Core Scientific shares seized by Celsius Network and crisis statement
The Pomerantz firm also pointed two other events, which would have had a negative impact on Core Scientific’s share price. The first concerns the September 28 filing last year of Celsius Network and affiliated entities in bankruptcy court.
The company then claimed that Core Scientific violated the provisions relating to automatic stay provisions during bankruptcy. Celsius pointed to the fact that Core Scientific did not want to respect its contractual obligations, that it threatened to end the agreements, and invoiced “excessive supplements”.
This move by Celsius would have caused Core Scientific’s share price to plummet 10.3%, September 29, 2022.
The last event, which Pomerantz will raise, dates from last October 27. Core Scientific then announced the existence of a ” uncertainty regarding the financial situation of the company, as well as a “significant doubt” about its ability to continue its activities. The company had also indicated that it held 24 bitcoin (BTC)against 1,051 BTC as of September 30, 2022.
Following the publication of this press release from Celsius, Core Scientific’s share price fell 78.1%October 27, 2022.
Core Scientific is currently trying to find cash by all means, even going to court to get rid of a large customer who has become insolvent. This investigation by Pomerantz could increase the concerns of the company.
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