Hut 8 investors reached a proposed $2.35 million settlement filed Monday in the U.S. District Court for the Southern District of New York. The settlement resolves securities claims related to the company's 2023 merger with US Bitcoin Corp., in which investors alleged Hut 8 overstated merger benefits and failed to adequately disclose energy and internet connectivity problems at King Mountain, a Texas bitcoin mining joint venture. The settlement covers investors who purchased or acquired Hut 8 securities in the U.S. or on a U.S.-based exchange between Feb. 13, 2023, and Jan. 18, 2024, and requires preliminary and final approval from U.S. District Judge Victor Marrero.
Settlement Filed for Hut 8 Merger Claims
The proposed settlement was filed in the U.S. District Court for the Southern District of New York and would resolve claims on behalf of investors who purchased or acquired Hut 8 securities between Feb. 13, 2023, and Jan. 18, 2024. The settlement amount of $2.35 million represents approximately 19.6% of the maximum recoverable damages of roughly $12.08 million, according to plaintiff counsel estimates included in the filing. The settlement still requires preliminary and final approval from U.S. District Judge Victor Marrero. Hut 8 did not admit wrongdoing under the proposed settlement and has denied that it violated the law or caused losses to investors.
Investors Alleged Merger Misrepresentations
The case centered on Hut 8's all-stock merger with US Bitcoin Corp., which closed in November 2023 and created the current Hut 8 Corp. Investors alleged that Hut 8 overstated the benefits of the transaction and failed to adequately disclose energy and internet connectivity problems at King Mountain, a Texas bitcoin mining joint venture in which US Bitcoin Corp. held a 50% interest before the merger. The lawsuit followed a January 2024 short-seller report by J Capital Research that challenged Hut 8's statements about the merger and alleged problems at King Mountain. Hut 8's share price fell after the report, and investors later sued, asserting claims under the Securities Act of 1933 and the Securities Exchange Act of 1934.
Court Dismissed Partial Claims in September
In September, Judge Marrero dismissed the investors' Exchange Act claims and also rejected Securities Act claims tied to alleged misstatements about US Bitcoin Corp.'s financial condition before the merger. However, he allowed part of the Securities Act case to proceed over alleged omissions related to risks at King Mountain. Those surviving claims focused on whether Hut 8's merger materials adequately disclosed problems at a facility that was material to US Bitcoin Corp.'s mining operations. Bitcoin mining and hosting businesses are heavily dependent on reliable power and high-speed internet access, making the King Mountain allegations central to the remaining case.
Mediation Produced Agreement in May
The proposed settlement was reached after mediation. According to the filing, the parties took part in a full-day virtual mediation session on May 7 before JAMS mediator Jed Melnick. The session did not immediately produce an agreement, but the parties later accepted a mediator's proposal on May 13 and entered into a formal stipulation dated June 18. In asking the court to preliminarily approve the settlement, lead plaintiff Abhishek Maheshwari said the deal provides investors with immediate recovery while avoiding the risk that Hut 8 could still defeat the case. The memorandum said the defendants had indicated they would seek judgment on the pleadings by challenging traceability, arguing that registered and unregistered shares were commingled after the merger.
FAQ
What is the Hut 8 settlement amount for the merger claims?
The proposed settlement is $2.35 million, filed in the U.S. District Court for the Southern District of New York. The settlement covers investors who purchased or acquired Hut 8 securities between Feb. 13, 2023, and Jan. 18, 2024, and represents approximately 19.6% of the maximum recoverable damages of roughly $12.08 million.
What did investors allege about the Hut 8 merger with US Bitcoin Corp.?
Investors alleged that Hut 8 overstated the benefits of its November 2023 all-stock merger with US Bitcoin Corp. and failed to adequately disclose energy and internet connectivity problems at King Mountain, a Texas bitcoin mining joint venture in which US Bitcoin Corp. held a 50% interest before the merger.
When did the parties reach the settlement agreement?
The parties took part in a full-day virtual mediation session on May 7 before JAMS mediator Jed Melnick. The parties later accepted a mediator's proposal on May 13 and entered into a formal stipulation dated June 18.
