The plaintiffs are seeking damages from Fred Thiel and the rest of management for the company’s misconduct, which the shareholders believe has led to continued litigation with the U.S. Securities and Exchange Commission (SEC). In May, the regulator accused Marathon Digital of violating securities laws.
Shareholders allege that the mining company’s management hid problems by artificially inflating the stock price, making favorable insider sales and making unjustified profits. The lawsuit states that Marathon Digital makes misleading statements. Shareholders demanded the nomination of at least four candidates to the company’s Board of Directors and the abolition of the previous procedure for the election of directors. This will allow for more transparent oversight of Marathon Digital’s operations, the plaintiffs assert.
The lawyers representing the shareholders did not specify a specific amount to be paid by the defendant, leaving the court to determine the amount at its discretion.
A few months ago, Fred Thiel said that the company was successfully implementing a strategy to reduce its net losses. While in the first quarter of 2022 they were as high as $12.9 million ($0.12 per share), in the first quarter of 2023 they will be just $7.2 million ($0.05 per share). In March, the company managed to reduce its debt by $50 million by early repayment of a loan with Silvergate Bank. The debt paid off increased the company’s bitcoin holdings by 3,132 coins as they were held as collateral.
Marathon Digital mined a record 1,245 bitcoins in May, a 366% increase from May last year. Earlier, Fred Thiel said that Marathon Digital has become the second publicly traded company in the world in terms of bitcoins stored.