Judge Dismisses Class-Action Lawsuit Against Bitcoin Miner Iris Energy

A class-action lawsuit filed by investors in Bitcoin miner Iris Energy has been dismissed by a United States District Court judge, marking a significant win for the mining firm. The lawsuit alleged that Iris Energy misled investors about key risks during its initial public offering (IPO) in 2021.

Dismissal of the Lawsuit

On September 27, US District Court Judge Jamel Semper ruled to dismiss the lawsuit without prejudice, stating that the investors failed to prove that Iris Energy (IREN) had intentionally misrepresented information or falsified statements. The plaintiffs accused Iris Energy, along with its executives and underwriters—including J.P. Morgan and Citigroup Global Markets—of violating the Securities Act and the Securities Exchange Act during the company’s November 2021 IPO.

The lawsuit claimed that several inaccuracies existed in the documents related to the IPO and subsequent communications. Investors argued that Iris Energy concealed significant risks, particularly regarding loans taken out to finance mining equipment, and that the firm made “false and misleading” statements about its financial health, including profits and asset levels.

Judge Semper concluded that Iris Energy was not obligated to disclose all details about its loan financing and that the plaintiffs had not sufficiently demonstrated that any of Iris Energy’s disclosures were materially misleading. The court found no legal basis for the claims made by the investors.

Iris Energy went public on November 17, 2021, raising $232 million through its IPO, initially debuting at a share price of $28. However, the firm faced a sharp decline as market conditions worsened. By January 24, 2022, its share price had dropped 69%, coinciding with a significant downturn in the overall crypto market, where Bitcoin also fell over 36%.

Broader Market Context

In a statement regarding the dismissal, the legal firm representing Iris Energy noted that the plaintiffs were attempting to recover losses from a broader market decline rather than specific misdeeds by the company.

In addition to the class-action lawsuit, Iris Energy has recently come under scrutiny from short-selling firm Culper Research. Culper accused the company of being “wildly overvalued” and criticized its investment strategy in high-performance computing (HPC). They claimed that while Iris Energy touted ambitious HPC plans, it was not investing enough to maintain competitiveness in the industry.

As Iris Energy navigates these challenges, the outcome of the dismissed lawsuit may help stabilize its position in the market, though ongoing concerns about its valuation and competitive strategy remain.