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Hut believes that the short report was an attempt by J Capital to spread misinformation in order to profit from its short sale. J Capital disclosed in its report that it was short HUT stock. Hut also mentioned that it held 9,195 Bitcoins in reserve with 205,759 miners under management in the U.S. as of Dec. 31. The response did not go into great detail on the specific accusations levied by J Capital, such as a relationship with a stock promoter group and undisclosed related party transactions.
“We will not be derailed by activists who stand to profit from spreading misinformation and making defamatory character attacks,” said CEO Jaime Leverton. “The short report is riddled with speculative accusations and misinformation.”
HUT Stock: Hut 8 Responds to J Capital Short Report
In the report, J Capital states that the company recently merged with U.S. Bitcoin Corp (USBTC). However, the activist short seller alleges that USBTC has been involved with stock promoters who have run into legal trouble in the past. USBTC’s co-founder and CEO, now the CSO and a director for Hut, was mentioned as being involved with “SEC-defined pump-and-dumps.”
J Capital also believes that USBTC has a relationship with the Honig group of stock promoters. “The SEC accused the Honig group of engaging in ‘classic pump and dump’ and ‘fraudulent schemes,’” said J Capital. “[Three] Stocks the group has been associated with are down an average of 89% from peak.”
Group members of Honig were also early investors in USBTC. Later on, the company received a fine over a securities law violation that claimed that the company hid the identities of its stock promoters.
J Capital also has concerns about the company’s management and one of its largest shareholders, which it believes is an undisclosed related party and the partner of USBTC’s CEO. The short seller notes that USBTC previously hired a 13-year-old “Chief Meme Officer” with a familial relationship with the Honig group.
On the date of publication, Eddie Pan did not hold (either directly or indirectly) any positions in the securities mentioned in this article. The opinions expressed in this article are those of the writer, subject to the InvestorPlace.com Publishing Guidelines.