US court has dismissed a lawsuit against miner Iris Energy for violations during IPO

What’s new? A US court has dismissed a class action lawsuit brought by Iris Energy investors alleging that the mining company concealed information about key risks and misled investors during its 2021 initial public offering (IPO). According to the court, the plaintiffs failed to prove falsification or intentional misrepresentation by the company.

The court’s decision

What else is known? The plaintiffs believe that Iris Energy, its executives, and underwriters, which include banks JPMorgan and Citi, violated the Securities Act and the Securities Exchange Act during the IPO. According to them, there were material inaccuracies in the company’s go-public documents and statements in the months that followed.

It is alleged that Iris failed to disclose loans it took out to finance mining rigs and made several false statements about its financial condition, including profits, losses, and assets.

However, the court found that Iris was not required to disclose all details of the loan financing, and the plaintiffs failed to prove misleading statements.

Iris Energy went public on November 17, 2021, after raising $232 million in an IPO. Trading in the shares under the ticker IREN started at $28, but it quickly fell amid sell-offs in the broader crypto market. By January 24, 2022, the value of the securities had collapsed by 69%. Bitcoin lost 36% of its value over the same period.

Iris’ attorneys at Davis Polks said the plaintiffs were seeking to recover their losses as a result of the drop in bitcoin’s value in 2022.

Earlier, Iris was also attacked by the trading firm Culper Research. It accused the miner of being grossly overvalued and not investing enough to stay competitive in the high-performance computing (HPC) industry. Notably, Culper holds a short position in IREN stock.

Iris Energy is an Australian-based mining company and ranks seventh in terms of capitalization with $1,59 billion in the general list of miners. IREN is trading at $8,44 on the Nasdaq, having lost 4,63% overnight. In five days the growth amounted to 6,16%, in the last six months — 43%, and since the beginning of 2024, the value of securities has increased by 8%.

In July, Iris Energy raised $413,4 million through a bond issue, the largest venture funding round for crypto projects in a month.