In response to a recent report by J Capital Research, Bitcoin miner Hut 8 finds itself in the spotlight as questions are raised about its practices and its partnership with USBTC. The controversial report, released on January 18, warned investors of potential risks associated with the merger.
Hut 8’s Confident Response
Hut 8 quickly addressed the concerns on January 19, expressing confidence in its partnership with USBTC. The company acknowledged reading the report and assured the digital asset community that it would provide necessary updates as deemed appropriate. In a tweet, Hut 8 stated, “We are aware of a short report issued on January 18 by J Capital Research… Hut 8 is reviewing the report and will provide updates as the Company deems appropriate.”
Despite the allegations, Hut 8 emphasized its trust in the current management team and the board of directors, asserting that the merger would contribute to the growth of all shareholders.
Market Reacts to J Capital’s Claims
The cryptocurrency market was jolted by J Capital’s report, which accused Hut 8 of engaging in activities that could pose risks to investors post-merger with USBTC. Among the allegations were claims of stock ownership concealment in a potential pump-and-dump scheme, with the report suggesting that major shareholders’ shares were obscured through an undisclosed related party.
On the financial front, the report asserted that the merger burdened Hut 8 with significant debt, paying more than the value of USBTC’s assets, especially considering the loss of miners and suboptimal equipment operation. An insider even disclosed that USBTC was on the brink of bankruptcy before the merger, describing it as a much-needed lifeline. Additionally, there were claims of associations with SEC-charged promoters.
As a consequence, Hut 8’s stock plummeted by 23.49%, triggering panic among traders who were quick to react to the pump-and-dump allegations. At the time of writing, the asset has seen a 3.85% decrease in the last 24 hours, trading at $6.92.
While some crypto users panicked over the report, others remained optimistic about Hut 8’s expansion plans, particularly ahead of the upcoming halving. As the situation unfolds, the digital asset community awaits further updates from Hut 8 regarding the allegations raised by J Capital Research.