Judge dismisses lawsuit alleging Iris Energy misled IPO investors

A U.S. District Court judge has dismissed a class-action lawsuit filed by investors against Bitcoin (CRYPTO:BTC) mining company Iris Energy, alleging the firm misled investors during its 2021 initial public offering (IPO).

The lawsuit claimed Iris Energy and its executives withheld crucial risks and made false statements regarding the company's financial condition, violating the Securities Act and Securities Exchange Act.

On September 27, Judge Jamel Semper dismissed the lawsuit, stating that the investors failed to provide sufficient evidence that Iris Energy intentionally misled them or falsified statements.

The judge also found that the company had no obligation to disclose every detail about its loans for mining equipment.

The lawsuit centered on claims that Iris Energy did not adequately disclose financial risks and provided inaccurate information about its profits, losses, and assets during its IPO and subsequent months.

However, Judge Semper ruled that there was no substantial evidence to suggest that Iris Energy's statements were materially misleading.

Iris Energy went public in November 2021, raising $232 million through its IPO at an initial share price of $28.

However, the company's stock quickly fell, losing 69% of its value by January 2022, in line with a broader decline in the cryptocurrency market.

During that period, Bitcoin itself fell by over 36%.

In response to the dismissal, Davis Polks, the legal firm representing Iris Energy, stated that the plaintiffs sought to recover losses resulting from the overall market downturn in Bitcoin during 2022, rather than any specific wrongdoing by the company.

This ruling comes as Iris Energy faces separate criticism from short-selling firm Culper Research, which has accused the company of being "overvalued" and not investing enough to remain competitive in the high-performance computing industry.

According to Davis Polks, the court's decision reflects the lack of evidence supporting the plaintiffs' claims.