Class-Action Suit Against Crypto Miner Iris Energy Quickly Withdrawn

The lawsuit, filed in the District Court for the District of New Jersey, was withdrawn a day after it was filed.

AccessTimeIconDec 13, 2022 at 12:52 p.m. UTC
Updated May 9, 2023 at 4:04 a.m. UTC
10 Years of Decentralizing the Future
May 29-31, 2024 - Austin, TexasThe biggest and most established global hub for everything crypto, blockchain and Web3.Register Now

A class-action lawsuit against Iris Energy (IREN), the bitcoin miner that last month said some of its mining equipment isn't producing enough cash to meet its financing obligations, was withdrawn a day after it was filed.

  • The suit was filed in the U.S. District Court for the District of New Jersey on Dec. 7 and withdrawn on Dec. 8, court documents show.
  • The suit had alleged that Iris Energy repeatedly gave out materially false information and misled investors, starting with the documentation for the firm's 2021 initial public offering. Those documents were negligently prepared and failed to disclose certain of the mining machines, "owned through its Non-Recourse SPVs [non-recourse special purpose vehicles], were unlikely to produce sufficient cash flow to service their respective debt financing obligations," the suit said.
  • Iris Energy continued to mislead investors throughout 2022 as its shares were traded on the Nasdaq, the claimant had alleged. The miner downplayed the severity of its debt and sought to assure investors by playing up its strategy of "operational efficiency and securing additional financing," the suit said.
  • However, some of the company's procured hardware was unlikely to produce enough cash to service the associated debt, so Iris Energy's debt was not as sustainable as presented, which would in turn have a material effect on the company's operations and financials, the withdrawn lawsuit alleged.
  • On Nov. 2, Iris Energy revealed that it was in discussions to restructure over $100 million of equipment loans because the machines in question did not produce enough cash to service the debt. The firm later received default notices on that debt, and said the mining machines will likely be seized by the lender.
  • On Nov. 18, Iris had to unplug the related equipment. That took out 3.6 EH/s of computing power offline, cutting IREN's average hashrate to 1.4 EH/s in November.
  • Because the debt was held by Non-recourse SPVs, Iris Energy's co-founder and co-CEO Dan Roberts has reportedly argued that it is incorrect to say that the miner defaulted on its obligations.
  • In its latest monthly update released on Tuesday, Iris Energy said it is considering selling 0.4 EH/s of machines.
  • Bitcoin Miner Bitfarms Warns of Default
    04:20
    Bitcoin Miner Bitfarms Warns of Default
  • How Bitcoin Mining Got 'Even More Competitive' In 2022: Analyst
    01:17
    How Bitcoin Mining Got 'Even More Competitive' In 2022: Analyst
  • Stronghold Digital CEO on State of Bitcoin Mining Amid FTX Fallout
    07:43
    Stronghold Digital CEO on State of Bitcoin Mining Amid FTX Fallout
  • Bitcoin Could Rally to $63K by March 2024: Matrixport
    01:11
    Bitcoin Could Rally to $63K by March 2024: Matrixport
  • UPDATE (DEC. 13, 13:54 UTC): Adds details and summation of CEO interview.

    UPDATE (DEC. 14, 08:40 UTC): Adds that complaint was withdrawn in headline, first paragraph.


    Disclosure

    Please note that our privacy policy, terms of use, cookies, and do not sell my personal information has been updated.

    CoinDesk is an award-winning media outlet that covers the cryptocurrency industry. Its journalists abide by a strict set of editorial policies. In November 2023, CoinDesk was acquired by the Bullish group, owner of Bullish, a regulated, digital assets exchange. The Bullish group is majority-owned by Block.one; both companies have interests in a variety of blockchain and digital asset businesses and significant holdings of digital assets, including bitcoin. CoinDesk operates as an independent subsidiary with an editorial committee to protect journalistic independence. CoinDesk employees, including journalists, may receive options in the Bullish group as part of their compensation.

    Sheldon Reback

    Sheldon Reback is a CoinDesk news editor based in London. He owns a small amount of ether.

    Eliza Gkritsi

    Eliza Gkritsi is a CoinDesk contributor focused on the intersection of crypto and AI.


    Learn more about Consensus 2024, CoinDesk's longest-running and most influential event that brings together all sides of crypto, blockchain and Web3. Head to consensus.coindesk.com to register and buy your pass now.