The capitalization of the German mining company Northern Data has fallen by almost $300 million after reports of BaFin investigation into its top managers. The latter is accused of manipulating the market.
On Friday, October 1, the quotes fell by more than 30%. Thus, at the time of writing, the securities are trading near €56. A week ago, their price exceeded €74. The company’s capitalization has fallen below €900 million.
In a conversation with the Financial Times, BaFin representative confirmed that the regulator is investigating “potential market manipulation in the context of Northern Data”. But declined to comment further. According to the publication, the company’s executives were charged. This happened after Northern Data published preliminary results for the 2020 fiscal year. The firm reported a loss of €12.3 million. In addition, revenue amounted to €16.4 million against the projected €120-140 million.
Manipulating the market
The company itself explained such a gap between the projected and real figures by the fact that it “could not realize revenue from two main customers”.
A representative of the Frankfurt prosecutor’s office also told that a complaint was against Northern Data. The charges relate to a “potentially misleading special release published by the company in November 2019”.
Northern Data has denied accusations of market manipulation. The company stated that the complaint relates to the announcement of the acquisition of the Bitcoin mining capacity provider Whinstone US. The mining company Riot Blockchain eventually bought the latter.
Agreement with Bitfield
Recall that earlier in September, Northern Data entered into a deal with the mining firm Bitfield, involving the purchase of at least 86% of the stake and the indirect acquisition of about 33,000 ASIC miners.
At the time of the transaction, the Bitfield hashrate is about 0.7 EH/s. After the end of the equipment start-up, the indicator will be approximately 3 EH/s. The computing power managed by Northern Data, including hosting clients, will reach approximately 6 EH/s.
The agreement was an exchange of shares in the amount of €400 million. Moreover, it involves the issuance of up to 5.1 million Northern Data securities.