This Derivative Complaint was brought for the benefit of nominal defendant, CleanSpark, Inc. (“CleanSpark” or the “Company”), against certain members of its Board of Directors (the “Board”) and certain of its executive officers (collectively the “Defendants”) seeking to remedy certain Defendants’ breaches of fiduciary duties.
CleanSpark describes itself as a bitcoin mining company which, through itself and its wholly owned subsidiaries, has operated in the bitcoin mining sector since December 2020. From March 2014 to June 30, 2022, the Company also provided energy technology solutions to commercial and residential customers to solve energy challenges in the alternative energy sector. As of June 30, 2022, the Company deemed its energy operations to be discontinued due to a decision to strictly focus on its bitcoin mining operations and divest of its energy assets.
The Company’s transition to one whose principal focus is now bitcoin mining began on December 10, 2020, when CleanSpark announced the acquisition of ATL Data Centers, Inc. (“ATL”). ATL’s business consisted of a traditional data center and a bitcoin mining operation. Defendants claimed that by leveraging CleanSpark’s proprietary microgrid technologies and trade secrets, CleanSpark could maximize energy savings, expand total power capacity and improve the resiliency of ATL’s existing bitcoin mining operations.
In its December 10, 2020, press release announcing the ATL acquisition, CleanSpark stated that the transaction represented the Company’s “first strategic acquisition as part of a larger growth plan following CleanSpark’s recent $40M institutional investment.”
In the December 10, 2020, press release, and throughout the Relevant Period, Defendants made materially false and misleading statements, and omitted material facts necessary to make the statements not misleading, concerning the Company’s due diligence of the ATL acquisition, the true nature and history of the acquired bitcoin mining assets, and the Company’s ability to implement the “first phase” of improving the ATL facility in accordance with its publicly disclosed timeline.
On January 14, 2021, short-seller Culper Research published a report (the “Culper Report”) revealing that the bitcoin mining business that was now called ATL was effectively just the rebranded assets of a now-defunct company called Virtual Citadel, Inc. that had gone through bankruptcy proceedings in early 2020. The Culper Report further claimed that the public bitcoin mining company Marathon Patent Group had just a few months earlier made an effort to acquire the same business but pulled out of the deal after discovering adverse information during the due diligence process.
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