Home CryptocurrencyBitcoin Bitcoin Miner Hut 8 Shares Plunge 23% Amid Short-Seller Accusations

Bitcoin Miner Hut 8 Shares Plunge 23% Amid Short-Seller Accusations

by SuperiorInvest

Bitcoin (BTC) miner Hut 8 saw its stock price drop more than 23% on January 18, the same day the company rang the Nasdaq opening bell and another spread an unverified report alleging that people insiders were preparing to dump their shares.

Hut’s share price fell from $9.30 to just $7.10 in after-hours trading. The selloff began around the same time that short-selling activist firm JCapital Research published a report titled “The Coming HUT Pump and Dump,” which claimed that the company’s Nov. 30, 2023, merger with fellow Bitcoin miner US Bitcoin (USBTC) could be putting Hut 8 investors in danger.

Hut 8’s share price fell on January 18. Source: TradingView

JCapital Research, which admits to having a short bias on its website, took aim at the recent $725 million merger deal, claiming that USBTC had a history of “legal problems” and that the majority of the shares of the recently merged Bitcoin miner are in the hands of an “undisclosed related party.”

“We found that USBTC is backed by promoters with a history of legal problems. In its short existence, USBTC appears to have defaulted on a loan and paid two government fines, one for committing securities violations,” JCapital wrote.

Additionally, JCapital claimed that USBTC CEO Michael Ho, now Hut’s chief strategy officer, concealed his relationship with stock promoters called Honig Group, which was accused by the US Securities and Exchange Commission in 2019 of engage in “classic pump and dump” and “fraudulent schemes.” Honig settled the charges and agreed to be prohibited from trading penny stocks.

“Ultimately, we firmly believe that shareholders of[HUT]“feel the pain of being on the wrong end of an overly leveraged pump and dump, only to be left with the most inefficient Bitcoin miner, which is unprofitable even at a Bitcoin price of over $60,000,” the report concluded.[HUT}shareholdersarelikelytofeelthepainofbeingonthewrongsideofanover-leveredpump-and-dumponlytobeleftholdingthemostinefficientBitcoinminerwhichisunprofitableevenataBitcoinpriceofover000”thereportconcluded[HUT}shareholdersarelikelytofeelthepainofbeingonthewrongsideofanover-leveredpump-and-dumponlytobeleftholdingthemostinefficientBitcoinminerwhichisunprofitableevenataBitcoinpriceofover000”thereportconcluded

“There is no way to verify the short report,” said a member of the crypto community on X (formerly Twitter), Cantonese Cat, commented in a post from January 18. “Many are panic selling. “It could be real, it could be panic.”

Cointelegraph contacted JCapital to verify the claims made and also contacted Hut 8 for comment on the allegations.

Related: Bitcoin miners in ‘sell mode’, dumping $450 million of BTC in one day

The report came on the same day that Hut CEO Jaime Leverton rang the opening bell at Nasdaq headquarters in New York, something the company said was done to “celebrate the completion of its merger.” of shares” between Hut 8 and USBTC.

Unlike many crypto miners forced to sell at least some of their mined Bitcoin holdings due to market headwinds, including companies like Core Scientific and Riot Blockchain, Hut 8 has continued to grow its stash of self-mined Bitcoin.

In a statement on January 5, Hut reported that it had mined 453 Bitcoin in December 2023, bringing its reserves to a total of 9,195 BTC, worth $377 million at current prices.

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