Just announced its intention for an IPO! Mining company Northern Data faces bankruptcy and tax evasion of tens of millions of dollars, exposed by former senior executive.

Financial Times reported that two former executives of the European large-scale mining company Northern Data are suing the company, alleging that they were retaliatorily dismissed for exposing alleged internal financial audit, tax evasion, and securities fraud activities. They emphasized that if the company is required to pay back tens of millions of dollars in evaded taxes, it could potentially face bankruptcy.

Former Executives Accuse Northern Data of Retaliatory Dismissal for Speaking Out Too Much Truth

Northern Data, which operates Bitcoin mining and artificial intelligence cloud computing businesses, faced a lawsuit last month from former executives Joshua Porter and Gulsen Kama, alleging wrongful dismissal. According to legal documents recently disclosed, the company is accused of concealing and deceiving investors about its true financial situation and evading taxes exceeding tens of millions of dollars.

Tax Evasion of Tens of Millions, Bankruptcy Looms if Taxes Not Paid

Firstly, as the Chief Operating Officer of Northern Data's U.S. subsidiary, Porter, upon his promotion to CEO, became aware of the company's true financial situation:

The company has a tax liability of $30 million in Germany and nearly $8 million in debt, yet it only has $17 million in cash on the books, with monthly expenses ranging from $3 to $4 million.

At the same time, he pointed out that despite the increasingly clear U.S. crypto tax laws, the Northern Data management did not change its operational structure or tax system, but instead engaged in illegal tax evasion of its mining profits:

The plaintiff was concerned that the company's U.S. tax evasion amount could exceed tens of millions of dollars, and if penalized by the U.S. Internal Revenue Service (IRS) and asked to pay, the company could face bankruptcy.

Porter raised this to the CEO of the parent company and requested it to be reported to the board, but he was retaliatorily dismissed.

Deceiving Investors and Partners

Additionally, as the CFO of the U.S. subsidiary, Gulsen Kama actively reported concerns about financial accounting and securities fraud to the CEO Aroosh Thillinathan and COO Rosanne Kincaid-Smith, but the company turned a blind eye:

The CEO and COO continued to misrepresent the financial situation to investors and business partners at a meeting in mid-June, attempting to conceal the fact that the company was nearing bankruptcy.

The documents stated:

The plaintiffs warned Northern Data of openly violating securities and tax laws and attempting to ensure that the company did not continue to make fraudulent statements about its audit process, but they were dismissed.

In response, Porter and Kama demanded compensation for their wrongful dismissal and expressed concerns about potential criminal liability for the company's illegal actions.

Just last week, the company expressed its intention to conduct an initial public offering (IPO) on the U.S. Nasdaq Stock Market next year, with a valuation of up to $16 billion.

European mining giant Northern Data aims to be listed on Nasdaq in 2025, with a valuation of up to $16 billion

Northern Data: Denies Allegations, Declines to Comment

Northern Data denies the allegations and states that it will vigorously defend itself:

As a publicly traded company, we ensure the accuracy of our financial reporting through comprehensive policies and processes, and the 2023 audited financial statements will be released soon.

Additionally, Tether, the stablecoin issuer holding a 51% stake in the company and a major investor, did not provide a positive response:

We reiterate our commitment to investors and stakeholders, maintaining confidence in the long-term potential of the company while operating with the highest standards of integrity and transparency.

NB2.DE Plummets Over 23% on the Day

Following the release of this news, Northern Data stock NB2.DE dropped by 23.1% on the last trading day of the previous week.

From the recent high point of the stock price announcement of the IPO on July 2, the price has dropped by over 39.7%, and the company's market value has evaporated by $523 million in just one week.