Hut 8 Corp Shares Plunge Amid Allegations About Risky Bitcoin Merger
Summary:
Bitcoin miner Hut 8 Corp saw its share price tumble 23% on Jan. 18, the same day it celebrated its merger with U.S. Bitcoin Corp (USBTC) by ringing the Nasdaq opening bell. The drop coincided with the release of a report by JCapital Research, claiming that the merger is risky for Hut 8 shareholders due to USBTC’s alleged history of legal troubles. Despite the allegations, Hut 8 continues to increase its Bitcoin reserves, standing in contrast to crypto miners like Core Scientific and Riot Blockchain who have sold parts of their mined Bitcoin due to market instability.
On January 18, the shares of Bitcoin miner, Hut 8 Corp, experienced a sizeable dip of over 23%. This considerable drop coincided with the company's ringing of the Nasdaq opening bell and an unsubstantiated claim that company insiders are planning to offload their shares. The price of Hut's shares dropped from $9.30 to a low of $7.10 during after-hours trading. The plunge began when JCapital Research, a firm known for its short-selling activism, published an article entitled "The Coming HUT Pump and Dump." The paper suggested that Hut 8's recent merger with fellow Bitcoin mining company, U.S. Bitcoin Corp (USBTC), could potentially endanger Hut 8 shareholders.
In its report, JCapital Research criticized the $725 million merger, suggesting that USBTC had a track record of “legal troubles” and that the majority of the newly-merged Bitcoin mining company’s shares are owned by an undisclosed related party. JCapital cited that USBTC has incurred legal fines, defaulted on a loan, and has questionable affiliations. Mention was made of USBTC’s CEO, Michael Ho, who is now Hut's chief strategy officer. Allegedly, he concealed his ties with the Honig Group, a stock promoter group accused by the SEC of fraudulent activities and pump and dump schemes in 2019. The Honig Group settled these charges and agreed to a ban on trading penny stocks.
Despite these potentially damaging revelations, many are skeptical about the authenticity of these allegations. For instance, Cantonese Cat, a Crypto X user, expressed concerns about the validity of the report, speculating that panic selling might fuel the current scenario. Both JCapital and Hut 8 have been contacted to confirm the allegations.
Interestingly, this report was released on the day Hut's CEO, Jaime Leverton, opened trading at the Nasdaq Headquarters in New York. This event was held to commemorate the successful all-stock merger between the companies Hut 8 Corp, U.S. Data Mining Group, and USBTC.
Over time, Hut 8 has displayed resilience, increasing its Bitcoin holdings. This growth contrasts with some other crypto miners, like Core Scientific and Riot Blockchain, who have found it necessary to sell some of their mined Bitcoin due to market instability. As of January 5, Hut 8 reported that it had mined 453 Bitcoins in December, amassing a total of 9,195 Bitcoins in reserves, valued at $377 million at current market rates.
Published At
1/19/2024 8:51:23 AM
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