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Crypto mining firm IREN, previously known as Iris Energy, is facing a class-action lawsuit filed by a group of investors who claim the company misrepresented the capabilities of its high-performance computing (HPC) business.
Led by investor Paul Williams-Israel, the suit was filed in a New York federal court. It specifically accuses IREN of overstating the readiness and capacity of its Childress, Texas facility as an HPC data center.
According to the complaint, the investors argue that a June 2023 statement from IREN announcing the expansion of its Childress site and its revitalized HPC strategy was materially false and misleading. The investors assert that the facility was not adequately equipped for high-performance computing tasks, contrary to the claims made by the company.
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Williams-Israel and other plaintiffs further allege that they would not have invested in IREN had they known the true state of the company’s HPC operations, implying that IREN’s stock price was “artificially and falsely inflated” by misleading information.
Cooling Design Under Scrutiny
The lawsuit also challenges Iris Energy’s claims about its “proven” air cooling design intended to prevent overheating at the Childress HPC center. According to the plaintiffs, this design had not been thoroughly tested, particularly in the Texas climate.
A report from short-seller Culper Research, referenced in the suit, highlighted that IREN’s cooling system was only tested in British Columbia, Canada, where temperatures are significantly cooler year-round compared to Texas.
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Culper, which holds a short position on IREN, has also raised concerns about the firm’s ability to compete in the HPC space. They argue that the company’s investments in the field fall short of what is necessary to establish a competitive presence.
Seeking Damages and Accountability
In addition to Iris Energy, the lawsuit names the company’s co-founders and co-CEOs, Daniel and William Roberts, along with CFO Belinda Nucifora as defendants. The plaintiffs are seeking compensable damages caused by what they describe as false statements made by the company and its executives.
This lawsuit comes shortly after another class-action case against IREN was dismissed. That suit involved allegations related to the company’s initial public offering (IPO) in 2021, where investors claimed they were misled about the risks of the business. Despite these legal battles, IREN remains one of the top Bitcoin mining companies, with a market cap of $1.42 billion.
