GRABAR LAW OFFICE INVESTIGATES CLAIMS ON BEHALF OF INVESTORS OF CLEANSPARK, INC. (NASDAQ: CLSK)
A securities fraud class action alleging wrongdoing committed by certain of CleanSpark’s Officers and Directors has survived a motion to dismiss the complaint.
It is alleged that on December 31, 2020, while the Company touted “[r]ecord [r]evenue” and “wins” for the Company in the form of “cashflow-positive” acquisitions, hidden from investors, was the fact that the Company’s recent acquisitions involved related party transactions, and CleanSpark’s purported growth plans and “wins” were significantly exaggerated.
The truth emerged on January 14, 2021, when Culper Research published a report (the “Culper Report”) titled, “CleanSpark (CLSK): Back to the Trash Can,” which revealed, among other things, that certain of the Company’s Officers and Directors caused the Company to overstate and, in some cases, fabricate certain of the Company’s contracts and clients and that these Officers and Directors caused the Company to engage in numerous undisclosed related party transactions, which drained capital from shareholders to the benefit of Company insiders, or for other questionable uses of corporate assets.
On this news, the price of the Company’s stock dropped from $39.34 per share at the close of trading on January 13, 2021, to $35.71 per share at the close of trading on January 14, 2021, representing a loss in value of $3.63, or over 9.2%. The next trading day, the Company’s stock continued its plunge, closing at $31.15 per share on January 15, 2021, representing an additional loss in value of $4.56, or nearly 12.8%. In total, over the course of those two trading days, the Company’s stock price fell $8.19 per share, representing a loss in value of over 20.8%.
In an apparent breach of their fiduciary duties, it is alleged that the certain Officers and Directors engaged in and or caused the Company to engage in numerous undisclosed related party transactions that materially benefited insiders to the detriment of the Company, including, but not limited to: (1) entering into a stock purchase agreement with p2klabs, Inc. (“p2k”) while the Company’s Chief Financial Officer (“CFO”), served as an officer of p2k; (2) allowing the Company to engage with purported customers owned and/or controlled by the Company’s CFO and/or the Company’s Chief Revenue Officer (“CRO”); (3) entering into an agreement with LAWCLERK.LEGAL (“LAWCLERK”) while the Company’s CRO was employed by LAWCLERK; (4) entering into a sub-lease with the Company’s President and CEO’s accounting practice, Blue Chip Accounting, LLC (“Blue Chip”), for office space; (5) engaging the Company’s President and CEO’s accounting practice accounting practice, Blue Chip, for accounting, tax, and administrative services; (6) entering into an agreement with Zero Positive, LLC 17 (“Zero Positive”), an entity controlled by a former officer and director; and (7) otherwise indiscriminate to CleanSpark’s business and growth prospects consisting of, but not limited to, entering into a consulting agreement with former Chief Executive Officer (“CEO”) and Chairman, and current Executive Chairman for management services (collectively, the “Related Party Transactions”).
During this time, certain Officers and Directors further breached their fiduciary duties by personally making and/or causing the Company to make to the investing public a series of materially false and misleading statements regarding the Company’s business, operations, and prospects. Specifically, certain Officers and Directors willfully or recklessly made and/or caused the Company to make false and misleading statements to the investing public that failed to disclose, inter alia, that: (1) the Company engaged in the undisclosed Related Party Transactions and Questionable Uses of Corporate Assets (together, the “Mismanagement”); (2) CleanSpark had significantly exaggerated key elements of its business operations, including purported customer and contract data; and (3) due to the foregoing, the Company’s business, operations, and prospects were materially overstated. As a result, the Company’s public statements were materially false and misleading at all relevant times.
Additionally, it is alleged that certain of the Company’s Officers and Directors breached their fiduciary duties by willfully or recklessly causing the Company to fail to maintain an adequate system of oversight, disclosure controls and procedures, internal controls over financial reporting, and internal controls over information technology, the latter of which the Company disclosed in its management assessment and the audit report included in the 2020 10-K.
CleanSpark shareholders who have continuously held company stock since before December 10, 2020, can seek corporate reforms, the return of funds spent defending litigation back to the company, and a court approved incentive award at no cost to them whatsoever.
If you would like to learn more about this matter at no cost to you, please us at firstname.lastname@example.org or call 267-507-6085.